[Marxism] Overproduction - underconsumption
sartesian at earthlink.net
Wed Oct 14 08:30:57 MDT 2009
Actually, Nestor, the same article appeared in the Financial Times, with
more detail apparently, and without the sobriquet about China being a
"locomotive." The World Steel Association [previously known as the
International Iron and Steel Institute] is an industry trade organization
designed to promote steel and the steel industry to consumers, government,
etc. etc. Might be interesting to compare their past record on predictions
to reality, just to get a glimpse of their track record for accuracy... not
that I have any reason to doubt anything a trade body would ever say about
the prospects for their industry.
But anyway, enough defeatism about the future of capitalism, let's get back
The WSA predicts that steel use in China will actually increase 2009 by
18.8%. Hey, that's just great news, isn't it. Happy days are here again,
pretty soon, any moment, right around the corner.. except.. except, China's
Iron and Steel Association predicted a 10% decline in 2009 so I wouldn't
rush out and buy shares in Baosteel based on the WSA article, know what I
mean? Haven't been able to track down any change in CISA's original
estimate, but if somebody else has, I would be grateful for the information.
But you know what, the info provided by the WSA is worth reproducing in
fool, in mean full:
12 Oct 2009
Beijing - The World Steel Association (worldsteel) is forecasting that
apparent steel use will contract worldwide by -8.6% to 1,104 mmt in 2009
after declining by -1.4% in 2008. This is an improved figure over the spring
forecast issued in April 2009 which predicted a decrease of -14.1%.
The improvement is largely due to the exceptionally strong growth in steel
demand in China. With signs, from the beginning of the second half of 2009,
of a recovery across the world now apparent, global steel demand in 2010 is
forecast to grow by 9.2% to 1,206 mmt which is a recovery to the level of
Commenting, Daniel Novegil, Chairman of the worldsteel Economics Committee
said: "The global recovery is stronger than we predicted in April. According
to our current forecast, China will rebound 19% in 2009 and 5% in 2010.
Emerging economies will slow down 17% in 2009, to grow 12% in 2010. Apparent
steel use in developed economies, that contracted 34% in 2009, will rebound
15% in 2010. Therefore, worldsteel forecasts that global steel demand will
return to growth in 2010 but this is expected to be moderate. As before the
financial crisis, the emerging economies, especially China, will be the
critical factor in driving world steel demand in the near future.
Concluding, Daniel Novegil said: "While the state of the global economy has
improved, uncertainties and concerns regarding the resilience of the
recovery still remain with the possibility of any premature reduction in
government stimulus actions. This uncertainty particularly exists for the
Chinese economy in 2010, whose fast recovery in 2009 was largely enabled by
such strong government stimulus policies".
China's apparent steel use in 2009 is expected to increase by 18.8% to reach
526 mmt. China is expected to account for 47.7% of world steel apparent use
and excluding China, potential world steel demand would have fallen
India also remained relatively resilient to the global crisis and apparent
steel use is expected to grow by 8.9% and 12.1% in 2009 and 2010,
The NAFTA region is expected to show a -35.8% decline in apparent steel use
in 2009 and then a positive 17.1% growth in 2010. Apparent steel demand in
the US is likely to fall by -38.7% to 60 mmt in 2009 after falling by -8.2%
in 2008. It should recover to 72 mmt in 2010 with a growth rate of 18.8%.
The EU-27 economies were also severely affected by the crisis and the region's
apparent steel use is expected to fall by -32.6% in 2009 to 122 mmt. In
2010, the apparent steel use in the EU-27 is expected to grow by 12.4%.
For both NAFTA and EU-27, the level of apparent steel use that is expected
in 2010 amounts to what was achieved back in 1991, demonstrating the
severity of the impact of the crisis on the steel industry.
Japan will see its apparent steel use decline by -31.3%, which is expected
to recover by 15.8% in 2010 to reach 61 mmt.
Apparent steel use in the CIS region is expected to contract by -30.8% in
2009 and should grow by only 8.2% in 2010.
I would recommend also that those interested take the time to look at the
pdf on apparent steel use, accessed through the link at:
http://www.worldsteel.org/?action=newsdetail&id=275. Clearly, any and
almost all growth is concentrated in China and India. As for the most
efficient producers-- Japan and South Korea, nothing that gets them back to
2008 levels. The Ukraine which has shut down about half its production
lines? The WSA predicts a 10% improvement in use, bringing it up to 55% of
the pre-shutdown levels.
But what of China, that's the big question? And the answer depends on--
profitability. Can China maintain expansion of unprofitable steel
production in an economy that has been transformed into a profit governed
economy? Certainly it's possible to maintain production, but then by
definition of capitalism, such production is overproduction and will find
its expression in further collapse of prices, increased pressures on
steelmakers to rationalize their output, laying off hundreds of thousands of
workers, etc. Remember the incident where a manager was killed by Chinese
workers recently? That manager was a manager of a steel related company,
engaged in steel finishing I believe, that was privatizing a previously
public owned enterprise, and was intent on dramatically reducing the labor
force and production hours.
Which gets us to the next critical point:
Rather than "defeatist," a realistic Marxist assessment of production in
China, of China's embrace of capitalism, as opposed to the ever-so-popular
confusion of expanding capitalist reproduction with "development," as
further opposed to obscuring class relations with "national" "third world"
chest-thumping, provides insight into the developing class struggle that
just might put the fire to the feet of the bourgeoisie in both their local
and international incarnations.
China as a locomotive? In the real world of real locomotives, there can
occur a fault which effectively demolishes the utility of the locomotive--
and that fault is called "crankcase overpressure." Locomotive engines are
designed to automatically shutdown when crankcase overpressure is detected
because, because if they don't, they might explode, literally. In the value
world of value locomotives, the parallel to crankcase overpressure is
PS I am flattered that Nestor actually broke his promise to the moderator
and attempted to engage in debate with me. Be still my heart.
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