Friday, August 31, 2007

Steel fear, still fear, two years later

China produces a lot of steel. We need steel. When we buy, we like to pay at lower price. China overproduces: it's people don't need that much of steel. China would like to sell the remaining steel to other countries. Indonesia is close, so why not? Note that the term "overproduce" and "remaining" suggest lower price (why?). Conclusion: we can buy steel at a lower price that we used to. What's wrong with this story? Seems like everybody is happy.

But not so fast. It turns out, there is also a steel producer at home. It's been in the business for quite a long time (no, it's not an infant industry company). It worries that Chinese steel will outcompete theirs in price. What would it do? You're right. Ask for protection!

By the way, the company is state-owned. Sounds familiar?
WAIT! Where did I read that? Oh, I remember now, I posted it back in 2005. It's just that this news from Kompas today reminds me of it again. In the old posting it was the Krakatau Steel's head who said it. Now it's the Industry Minister. Same numbers, same paranoia, same confusion.

1 comment:

anymatters said...

apparently we don't have the raw material (iron/Fe) unless "besi tua".