Mike:
I posted on this subject some time ago. You know that I deal intimately with the steel industry at my day job.
Here is the scenario and it really doesn't pertain to China's industrial growth or NAFTA for that matter. However, I do rest a part of the blame on Mr. Bush as I believe he and his advisor's were aware of what was really happening.
Last year China began buying American scrap steel in boatload quantities and shipping back home. American scrap was at an all-time low per ton price.
In the fall of last year, the largest Taconite producer lost their most productive mine due to a fire. The mine was flooded and ceased production until sometime in the spring of this year. This mine provides 35% of the Taconite for U.S. mills.
There are 2 types of steel producers in this country. The largest type is the mini-mills. The mini mills derive their product from the electrode melting of a charge of scrap steel.
The other type is the mill that produces steel from iron ore or Taconite. This steel is melted in a BOF type furnace and run on a continuous caster and then rolled into coils or what we call steel bands. The mini mill also uses a caster and rolling mill.
The one-two hit of the mine going off production and the Chinese buying all the scrap they could (at a low price) has resulted in both types of mills not being able to produce steel.
Mr. Bush rolled off the import tariff, paving the way for the Chinese to import steel into this country basically duty free. We call this boat iron.
I question Mr. Bush's motives for rolling off the tariff. The papers spouted WTO, but I think that there was a lot more than WTO politics involved.
The lack of steel is going to affect every man woman and child in this country. The cost of durable goods is going to go up and not just a little. I wonder if the economy in this country is going to be able to stand it?
I know this post is somewhat politically jilted. I do try to adhere to the ethics and principals of this site. Please accept my apology for the post. I just want to air exactly what is going on as it pertains to the citizens and consumers of this country.
