Cheap Chinese steel has driven global prices down and may be the reason behind ArcelorMittal’s shut down and retrenchment of 800 workers.
That is the view of Energy Chamber CEO Dr Thackwray Driver who said global prices have nosed dived because China has changed from steel production mainly for domestic use to exporting to the international market.
Driver was commenting on the lay off of 600 workers by Arcelor Mittal on Monday, just months after the company sent home some 200 workers from it steel plant at the Point Lisas Industrial Estate. The Indian-based multinational company, the world’s leading steel and mining company with a presence in 60 countries, said it has scaled down its T&T operations due to an over-supply of steel in the global market and a decrease in orders of it direct reduced iron (DRI) and steel products.
Speaking to the Guardian at an Energy Chamber breakfast seminar at Cara Suites Hotel and Conference Centre, Claxton Bay yesterday, Driver said increased exports of cheap steel from China has resulted in steel plants around the world are closing down.
“Obviously for ArcelorMittal, they have stopped production in Trinidad so we have no revenue coming in,” he said.
China produces almost half of the world’s steel and buys more than two-thirds of its seaborne iron ore. As the country goes through economic decline, which has slowed construction, steel makers there have stepped up exports to compensate for the shortfall.
Bloomberg reported yesterday that “steel exports by China had exceeded 100 million metric tons for the first time as iron ore imports increased amid a shuttering of high-cost domestic supply.”
Driver said plants that are surviving globally are those with the highest productivity levels and lowest production costs. While T&T’s production costs are generally low because of cheap electricity, the shortage of gas to the plant has affected their output.
With ArcelorMittal facing a possible closure of its T&T operations, he said, there will be less Government revenue and foreign currency coming in.
“Trinidad will become one of the locations which they look to close. If we’re not competitive, people are not going to go on producing and investing in Trinidad.”
The ArcelorMittal facility in T&T produces hot-briquetted iron (HBI) used as a feed material in steel production. The plant at Point Lisas, which was built in 1996 and began operations in 1999, has the capability of producing 550,000 tons of HBI annually.