Will China’s new monetary policy impact the steel market?
June 22, 2010 from American Institute of Steel Construction
Steel industry executives don’t appear optimistic that China will truly implement its announced new monetary policy. In fact, today the New York Times reported that Chinese currency “slipped Tuesday in its second day of trade since Beijing promised increased ‘flexibility’ in the exchange rate, after mixed signals from Beijing on just how quickly it would allow the currency to appreciate.”
American Metal Market, a leading news publication for the steel industry, reported that steel executives attending AMM’s 25th annual Steel Success Strategies Conference in New York are taking a “wait-and-see” attitude. AMM reported that Mario Longhi, president and chief executive of AISC –member Gerdau Ameristeel Corp. stated: “Any revaluation of this type is a step in the right direction. But what matters is the whole package. It should help exports, but we’ll see. I don’t think it is enough.”
AMM also cited other industry experts, such as analyst Michelle Applebaum, who said they believe internal pressures within the Chinese economy will prevent any substantial move in the value of Chinese currency and that a weakening Chinese economy will actually push Chinese steel prices lower. And Scott Paul, executive director of the Alliance for American Manufacturing said that talk is cheap. “I will believe it when I see it. Unless the move is rapid and significant, China’s announcement is nothing more than a cynical ploy ahead of the G-20 and in the wake of increasing congressional pressure.”
Paul wrote an extensive response to China’s announcement in the Huffington Post where he stated: “I’m here to report the fight is just beginning. China would like nothing more than pressure from American lawmakers to disappear after its big announcement. Just over the past two weeks, Senators and Members of Congress of both parties have raised serious concerns over China's currency policy and grilled the Obama Administration on their response. China's currency will undoubtedly rise against the dollar, but the change may not be significant or fast enough to put a real dent in our enormous trade deficit or boost our exports enough to create a considerable number of manufacturing jobs.”
According to Paul: “America's workers and businesses are guaranteed a level playing field under our own trade laws, and in theory, under the World Trade Organization. We're not asking for special treatment, we just want the opportunity to compete.
For more information contact:
American Institute of Steel Construction
The American Institute of Steel Construction, headquartered in Chicago, is a not-for-profit technical institute and trade association established in 1921 to serve the structural steel design community and construction industry. AISC’s mission is to make structural steel the material of choice by being the leader in structural steel-related technical and market-building activities, including: specification and code development, research, education, technical assistance, quality certification, standardization, and market development. AISC has a long tradition of service to the steel construction industry of providing timely and reliable information.
130 East Randolph St. Suite 2000
Chicago IL 60601
Fax: 312.626.2402 www.aisc.org