Today, I turned my eyes to China's steel sector.
One thing that I've noticed since the trade war started was that China's crude steel production has continued to trend higher, while total steel exports have trended significantly lower.
Largely, the explanation has been that domestic consumption is increasing due to China's Belt and Road Initiative.
OK, fine… I get it.
But since the COVID crisis hit, I've noticed a greater-than-usual disconnection between the data China makes publicly available and data available from other entities.
Recently I read through a report issued by Barclays that outlines the effect COVID has had on several industries, including mining and steel.
The first thing I noticed was that the Air Quality Index for the steel hubs indicates an increase in activity… yet inventories were rising and capacity utilization was starting to decline, when it should be going the other direction...
And top-level production itself appears to be in decline as well (albeit from a very high level). |
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