Something somewhat different

dmschanoes dmschanoes at earthlink.net
Sun Nov 9 20:39:44 MST 2003


Several days ago Jon posted an interesting piece from the Wall Street
Journal regarding shipping freight rates tripling.

Reviewing and old Financial Times (Oct 30) I found the following in a
discussion of the overinvestment of the Chinese steel industry ( production
has doubled in 4 years to more than 200 million tons and 50 million more
tons of capacity are anticipated by 2005-- and all this while global
capacity exceeds steel use by almost 33%).

"The [Chinese steel] industry's growth is rippling around the globe,
prompting BHP Billiton and Rio Tinto in Australia, and CVRD in Brazil, the
world's three largest iron ore miners to ramp up production and increase
prices.  The growth in seaborne iron ore trade has been one of the main
drivers of the spike in freight rates for bulk carge ships, which in some
case have risen fourfold."

Now that's pretty interesting.   But it gets even more interesting, as the
central government is worried about this overinvestment but finds itself
unable to stop it.

"More to the point, the central government no longer appears powerful enough
to restrict well-connected private companies such as Shagang, which have
considerable autonomy over investment plans.
Steel companies are back enthusiastically by state-owned banks.  Once shy of
lending to private companies, the banks now seek out entrepreneurs to
diversify their assets away from government enterprises."

Does this sound like an earthquake  in the making or what?



~~~~~~~
PLEASE clip all extraneous text before replying to a message.



More information about the Marxism mailing list