Latest news with #steelindustry
The Independent
5 days ago
- Automotive
- The Independent
Chinese investors snap up stocks on hopes for an end to price wars and overcapacity
China's stock market is buzzing over government promises to tackle price wars that have hurt profits and worsened global trade tensions. The prevailing catchphrase is 'anti-involution,' and it reflects efforts to curb intense competition and overcapacity in industries like solar panels, steel, and electric vehicles. With rising trade barriers such as President Donald Trump 's higher tariffs, and relatively weak domestic demand, manufacturers have been slashing prices, undermining their bottom lines and driving some out of business. The producer price index, which measures the price that factories receive for their goods, has fallen steadily for nearly three years in China in a prolonged bout of deflation. The long-running issue spilled over into global markets as low-priced Chinese exports worsen trade friction with key trading partners including the United States and Europe. Solar panel glass makers agree to cut output by 30% In a series of recent statements, the Chinese government and industry associations have signaled they're getting serious about reining in cut-throat competition, known as invollution or 'neijuan' in Chinese. The top 10 makers of glass for solar panels agreed on June 30 to shut kilns and cut production by 30%, an industry association said. The government has launched an auto safety inspection campaign, addressing concerns that automakers were skimping on quality to cut costs. It's unclear whether these efforts will succeed, but the sense that China may finally be tackling this chronic problem was enough to spark a rally in stocks in some of those under-pressure sectors. Shares of Liuzhou Iron & Steel Co. gained 10% on Friday and have risen more than 70% since June 30. Solar panel glass producer Changzhou Almaden Co. fell at the end of last week but is still up about 50%. More broadly, two exchange traded funds in solar panels and steel have risen about 10%, outpacing a 3.2% rise in the Shanghai Composite, China's leading market index. The performance of EV-maker stocks has been mixed, with Li Auto and Nio recording double-digit percentage gains while market leader BYD declined. Foreigners can't buy Chinese stocks directly but they are able to invest in about 2,700 stocks and 250 exchange traded funds through the Hong Kong exchange. Government calls intense price wars 'disorderly' The gains follow high-level government pronouncements against disorderly price wars. On June 29, the People's Daily newspaper, the mouthpiece of the ruling Communist Party, ran a lengthy page 1 article on involution, saying they run counter to the party's goal of high quality economic development. Chinese leader Xi Jinping weighed in at a closed-door economic meeting, calling for better regulating competition and incentives by local governments to attract factory investments that are blamed for overinvestment in affected industries. The tougher talk began with a focus on automakers in late May, specifically around electric vehicle price wars that began more than three years ago. Analysts at investment bank UBS said the shift is good news for auto industry profits and company stocks. 'Though it's difficult to imagine a sudden U-turn of the industry from fierce competition to orderly consolidation, it's indeed possible to have near-term ceasefire of the price war,' they wrote. Weak demand and overcapacity bring a fight for survival After BYD launched another round of price cuts on May 23, some competitors, the main industry association and government all called for fair and sustainable competition. The EV battery industry, the cement association and major construction companies have issued statements echoing calls for an end to excess competition. The term involution, which suggests a spiraling inward and shrinking, was initially applied in China to students and young workers, who felt they were caught up in meaningless competition that led nowhere as the job market weakened and wages stagnated in recent years. At the industry level, it has come to mean sectors that have too many companies competing for a slice of the pie, leading to fierce price cutting to try to gain market share. The mismatch between production capacity — how much an industry can make — and actual demand for the product, reflects overcapacity that forces companies to compete for survival in a limited market space, said a recent article in the Communist Party magazine Qiushi. Obstacles to fixing the problem Some Chinese industries, especially steel and cement, have long suffered from overcapacity. A government push to promote green industries has fostered similar problems in that sector, including solar panels, wind turbines and electric vehicles. A flood of Chinese exports is leading to more trade barriers in Europe and the U.S. and in some emerging markets such as Mexico, Indonesia and India. Ultimately, economists say industries need to consolidate through company mergers and bankruptcies. But the process will take time. A major obstacle is provincial governments that want to protect local companies and jobs. Alicia García-Herrero, the chief economist for Asia-Pacific at the Natixis investment bank, said that recent comments by top Chinese economic officials suggest they realize something needs to be done. 'How much is action versus words, I don't know,' she said. 'But I do think it's a big problem for China.' ___ Associated Press researcher Yu Bing contributed.
Associated Press
5 days ago
- Automotive
- Associated Press
Chinese investors snap up stocks on hopes for an end to price wars and overcapacity
BEIJING (AP) — China's stock market is buzzing over government promises to tackle price wars that have hurt profits and worsened global trade tensions. The prevailing catchphrase is 'anti-involution,' and it reflects efforts to curb intense competition and overcapacity in industries like solar panels, steel, and electric vehicles. With rising trade barriers such as President Donald Trump's higher tariffs, and relatively weak domestic demand, manufacturers have been slashing prices, undermining their bottom lines and driving some out of business. The producer price index, which measures the price that factories receive for their goods, has fallen steadily for nearly three years in China in a prolonged bout of deflation. The long-running issue spilled over into global markets as low-priced Chinese exports worsen trade friction with key trading partners including the United States and Europe. Solar panel glass makers agree to cut output by 30% In a series of recent statements, the Chinese government and industry associations have signaled they're getting serious about reining in cut-throat competition, known as invollution or 'neijuan' in Chinese. The top 10 makers of glass for solar panels agreed on June 30 to shut kilns and cut production by 30%, an industry association said. The government has launched an auto safety inspection campaign, addressing concerns that automakers were skimping on quality to cut costs. It's unclear whether these efforts will succeed, but the sense that China may finally be tackling this chronic problem was enough to spark a rally in stocks in some of those under-pressure sectors. Shares of Liuzhou Iron & Steel Co. gained 10% on Friday and have risen more than 70% since June 30. Solar panel glass producer Changzhou Almaden Co. fell at the end of last week but is still up about 50%. More broadly, two exchange traded funds in solar panels and steel have risen about 10%, outpacing a 3.2% rise in the Shanghai Composite, China's leading market index. The performance of EV-maker stocks has been mixed, with Li Auto and Nio recording double-digit percentage gains while market leader BYD declined. Foreigners can't buy Chinese stocks directly but they are able to invest in about 2,700 stocks and 250 exchange traded funds through the Hong Kong exchange. Government calls intense price wars 'disorderly' The gains follow high-level government pronouncements against disorderly price wars. On June 29, the People's Daily newspaper, the mouthpiece of the ruling Communist Party, ran a lengthy page 1 article on involution, saying they run counter to the party's goal of high quality economic development. Chinese leader Xi Jinping weighed in at a closed-door economic meeting, calling for better regulating competition and incentives by local governments to attract factory investments that are blamed for overinvestment in affected industries. The tougher talk began with a focus on automakers in late May, specifically around electric vehicle price wars that began more than three years ago. Analysts at investment bank UBS said the shift is good news for auto industry profits and company stocks. 'Though it's difficult to imagine a sudden U-turn of the industry from fierce competition to orderly consolidation, it's indeed possible to have near-term ceasefire of the price war,' they wrote. Weak demand and overcapacity bring a fight for survival After BYD launched another round of price cuts on May 23, some competitors, the main industry association and government all called for fair and sustainable competition. The EV battery industry, the cement association and major construction companies have issued statements echoing calls for an end to excess competition. The term involution, which suggests a spiraling inward and shrinking, was initially applied in China to students and young workers, who felt they were caught up in meaningless competition that led nowhere as the job market weakened and wages stagnated in recent years. At the industry level, it has come to mean sectors that have too many companies competing for a slice of the pie, leading to fierce price cutting to try to gain market share. The mismatch between production capacity — how much an industry can make — and actual demand for the product, reflects overcapacity that forces companies to compete for survival in a limited market space, said a recent article in the Communist Party magazine Qiushi. Obstacles to fixing the problem Some Chinese industries, especially steel and cement, have long suffered from overcapacity. A government push to promote green industries has fostered similar problems in that sector, including solar panels, wind turbines and electric vehicles. A flood of Chinese exports is leading to more trade barriers in Europe and the U.S. and in some emerging markets such as Mexico, Indonesia and India. Ultimately, economists say industries need to consolidate through company mergers and bankruptcies. But the process will take time. A major obstacle is provincial governments that want to protect local companies and jobs. Alicia García-Herrero, the chief economist for Asia-Pacific at the Natixis investment bank, said that recent comments by top Chinese economic officials suggest they realize something needs to be done. 'How much is action versus words, I don't know,' she said. 'But I do think it's a big problem for China.' ___ Associated Press researcher Yu Bing contributed.
CTV News
16-07-2025
- Business
- CTV News
New measures to support Canada's steel industry
Ottawa Watch Prime Minister Mark Carney announced new measures to support Canada's steel industry amid the trade war. CTV's Stefan Keyes reports.
CBC
16-07-2025
- Business
- CBC
Steel industry is 'crown jewel' of Canada's manufacturing sector: Joly
Industry Minister Mélanie Joly tells Power & Politics new federal measures are meant to protect and support the domestic steel industry — the 'crown jewel' of Canada's manufacturing sector — in the face of U.S. tariffs.
Al Jazeera
16-07-2025
- Business
- Al Jazeera
Canada introduces tariffs on trade partners to protect domestic industries
Canadian Prime Minister Mark Carney has said that Canada will introduce a tariff rate quota on countries it has free trade agreements with, excluding the United States, in order to protect its domestic steel industry. Carney announced the new measures on Wednesday. The plan includes a 50 percent tariff that will apply to imports from relevant countries that surpass the 2024 volumes, though Canada will honour existing arrangements with its United States-Mexico-Canada Agreement (USMCA) trade partners, Carney said. Canada will implement additional tariffs of 25 percent on steel imports from all countries containing steel melted and poured in China before the end of July. Carney is responding to complaints from the domestic industry, which had said that other countries are diverting steel to Canada and making the domestic industry uncompetitive due to US tariffs. The Canadian steel industry had asked the government to introduce tougher anti-dumping measures to protect the domestic industry. US President Donald Trump increased import duties on steel and aluminium to 50 percent from 25 percent earlier this month. Canada is the top seller of steel to the US. Carney also said domestic steel companies would be prioritised in government procurement, and he introduced a fund of one billion Canadian dollars ($730m) to help steel companies advance projects in industries such as defence. 'These measures will ensure Canadian steel producers are more competitive by protecting them against trade diversion resulting from a fast-changing global environment for steel,' Carney said on Wednesday. For countries without free trade agreements with Canada, the government lowered the tariff-free quota to 50 percent of 2024 volumes from 100 percent previously. Above the quota, imports will also face a 50 percent tariff. Catherine Cobden, president and CEO of the Canadian Steel Producers Association, in an interview with broadcaster CBC, said the timing wasn't sufficient for domestic steelmakers confronting a crisis. 'This is something we should have been doing all along, but it's fantastic to see that we are making progress,' Cobden said. In a separate statement, Canadian steel maker Evraz said it has filed a complaint against steel imports from Mexico, the Philippines, South Korea, Turkiye and the US, against unfairly priced imports of oil country tubular goods.
