MAC: Mines and Communities

Millions of Chinese metals and coal workers to lose their jobs

Published by MAC on 2016-02-03
Source: WSWS, Mining.com, Bllomberg (2016-02-03)

The Chinese regime has announced that 400,000 steel workers will lose their jobs as output is reduced by up to 150 million tonnes.

What's more, another two and a half million employees in the coal, cement, alumininum and glass industries are expected to be made redundant "in the next few years" as China cuts their production by 30 per cent.

That's according to the World Socialist Website (WSWS), which cites the "enormous impact" that this will have on Chinese families who migrated from the countryside with hopes of a better life. Not to mention the "social instability" that whill result.

The WSWS points out that this "China syndrome" is almost universal. It may be welcomed by investors overjoyed at the economic "efficiencies" caused by job losses, but vigorously opposed by workforces worldwide.

Nonetheless, the WSWS deplores the campaign by the United Steelworkers in the USA to "blame" their Chinese counterparts for the decline in US steel production and resultant layoffs.

(That's a sentiment reflected by London Calling last October when it criticsed UK steeworkers for their claim that Chinese exports of cheap steel into the UK, purportedly led to the closure of UK plants, and substantial unemployment among British workers. See: London Calling detects a green finch in China's bull shop).

WSWS concludes:

"Steelworkers in China, the US, Japan, India and everywhere around the globe are facing the same problems, brought about not by the workers of other countries but by the fundamental contradictions of the capitalist system.

"In place of nationalism, chauvinism and war, workers need an international socialist policy that unites the workers of the world in a common struggle to defend jobs and living standards".

China announcing 400,000 steelworker job cuts

By Samuel Davidson

World Socialist Website (WSWS)

1 February 2016

An estimated 400,000 steelworkers in China will lose their jobs, in line with plans to slash crude steel production capacity by between 100 million and 150 million tons.

The announcement was posted Sunday on government web sites, and reports a decision made by the State Council on January 22 to cut steel, coal and other basic industrial production in response to the global slump and declining growth in China.

Li Xinchuang, head of the China Metallurgical Industry Planning and Research Institute, said that the cuts in production would translate into 400,000 steelworkers losing their jobs.

“Large-scale redundancies in the steel sector could threaten social stability,” Li Xinchuang told the official Xinhua News Agency Monday.

The State Council did not say when the cuts would be made, but China, which produces half of the world’s steel, has already cut capacity by 90 million tons in response to the growing slowdown in the Chinese and world economy, and is under enormous pressure to do more. Along with the cuts already made, the new cuts will amount to about a 20 percent reduction in steelmaking capacity.

The reductions will have an enormous impact on Chinese workers. In addition to those directly employed in steel making, it is estimated that for every job lost in steel, another 3 jobs are lost in related and supporting industries.

Three million workers in the steel, coal, cement, aluminum and glass industries are expected to lose their jobs in the next few years as these industries seek to cut production by 30 percent.

Many of these employees are first-generation workers who migrated from impoverished rural villages with hopes of a better life. Often their families are dependent upon money these workers are able to send home.

As in the United States and every other country, investors responded to the announced job cuts with joy. The stock price of China’s largest steelmaker, Hebei Iron & Steel, rose 4.3 percent on the news, and the second-biggest, Baoshan Iron & Steel, rose by 5.3 percent. The stock prices of China’s coal producers also rose on the news of the layoffs.

According to the World Steel Association, China’s steel production in 2014 amounted to 822.7 million tons, or 49.4 percent of the world output of steel. Japan is the second largest steel producer, at 110.7 million tons, followed by the United States at 88.2 million tons and India at 86.5.

In 2015 world steel production fell by 2.8 percent. China’s steel production fell to 803.8 million tons, or a drop of 2.3 percent, the largest fall in 25 years. US steel production fell 11 percent to 78.9 million tons and European production declined by 3.2 percent. Japan, Turkey and South Korea also saw declining steel production in 2015.

The outlook for 2016 is even further cuts. Prices for steel have been on a corresponding decline. The benchmark for hot roll steel has fallen on the world market from over $600 a ton in February 2013 to less than $300 a ton in December 2015.

According to the World Steel Association there is currently an overcapacity of steelmaking by 300 million tons. In other words, the world’s overcapacity of steel is greater than the combined production in Japan, the United States and India, the second, third and fourth largest producers combined.

US Steel, the second largest steel producer in the United States, reported a $1 billion loss for the fourth quarter of 2015, for a total loss of over $1.5 billion for the year. The steelmaker reports that its production has fallen to less than 70 percent of capacity. Over the past year it has laid off thousands of steelworkers and idled several mills.

The massive layoffs among Chinese steelmakers underscores the reactionary nature of the United Steelworkers’ union campaign to blame Chinese steelworkers for the decline in US steel production and resultant layoffs. Behind the nationalism and chauvinism being pushed by the USW is support for the war drive of the US government against China.

Steelworkers in China, the US, Japan, India and everywhere around the globe are facing the same problems, brought about not by the workers of other countries but by the fundamental contradictions of the capitalist system.

In place of nationalism, chauvinism and war, workers need an international socialist policy that unites the workers of the world in a common struggle to defend jobs and living standards.


China 'war on coal' to drive labour unrest — report

Cecilia Jamasmie

Mining.com

3 February 2016

China’s decision to speed up closures and mergers of small coal mines, in a bid to reduce pollution and improve energy efficiency, will face mounting resistance, a new report shows.

According to BMI Research, labour unrest across the country’s coal industry, following late salary payments and job cuts, will increase costs for local miners in the medium term, 80% of which were already losing money by the end of last year.

The situation is likely to worsen soon, the analysts say, following last month’s fresh decision by Beijing to invest $4.6 billion in closing about 4,300 coal mines. The fresh move includes removing outdated production capacity of 700 million tonnes and redeploying around 1 million workers over the next three years.

The newly announced measures follow China's decision to halt the approval of new coal mines until at least 2019.

These resolutions will inevitable trigger labour issues. Change is already in the air — protests and demonstrations doubled in 2015, to 2,774, with December's total of more than 400 such incidents setting a monthly record, according to the Hong Kong-based China Labour Bulletin.

Since 2013, the nation’s coal sector has shed 890,000 jobs, equal to all the new jobs the same industry created during the stimulus-driven boom that began in 2007. The struggling sector currently employs nearly 6 million people.

Opportunity for renewables

According to BMI’s report, China's renewable energy industry will stand to benefit by stepping in as a substitute for coal in the coming years. The experts forecast coal consumption to decline (- 5.0% y-o-y in 2016) after coal imports plummeted by 35% y-o-y in December 2015.

Clean-energy investment instead hit an all-time high of $110 billion, about equal to the investment of the U.S. and Europe combined last year, a 17% increase when compared to 2014. BMI expects the figure to surge even more over the next few years.


Goldman says iron faces extra pressure from China steel cuts

Bank says industry faces a long period of hibernation.

David Stringer

Bloomberg

3 February 2016

Iron ore prices that have been battered by global oversupply may face additional pressure as China’s central government steps up efforts to cut back steel capacity in the world’s top producer, according to Goldman Sachs Group.

The State Council’s plan to reduce the industry’s capacity by 100 million to 150 million metric tons may result in actual steel output dropping by 55 million to 95 million tons, the bank said in an e-mailed report. That lost output represents 90 million to 150 million tons of iron ore, or as much as 15% of the seaborne market, the bank estimated.

Iron ore has been in retreat for the past three years as rising low-cost production from the world’s largest miners coincided with shrinking demand for steel in China, spurring a global glut. Goldman reduced its price forecasts in December, raising the possibility that the iron ore industry faces a long period of hibernation. In China, steel mills have reported mounting losses as prices dropped and opposition to record exports climbed.

‘Downward Pressure’

“In the face of ongoing losses, stretched balance sheets and growing trade restrictions, China is under pressure to further lower its steel production,” analysts including Melbourne-based Owen Birrell said in the February 2 report. The projected loss of steel output from the capacity cuts will likely put “further downward pressure on an iron ore market already in oversupply.”

Ore with 62% content delivered to Qingdao was at $43.84 a dry ton on Tuesday, according to Metal Bulletin. Prices are up 0.6% this year after a 39% slump in 2015. In December, Goldman forecasts that iron ore will average $38 a ton this year and $35 in both 2017 and 2018.

“Clearly some action has to be taken,” Michael McCarthy, chief market strategist at CMC Markets in Sydney, said by phone, referring to capacity-cut plan as China seeks to shift the economy toward consumer-led growth and away from infrastructure. “It requires official sanctions for these companies, in any case, to move to cut their production.”

Goldman’s report noted that the State Council’s plan for the capacity cuts hadn’t come with a timeframe. In China, Caixin reported on Wednesday that the government aimed to implement the reductions within five years rather than three, citing a person familiar with the initiative that it didn’t identify.

Steel capacity in China, which accounts for half of world supply, was estimated at about 1.2 billion tons at the end of last year, according to the China Iron & Steel Association. The country’s crude-steel production shrank 2.3% to about 804 million tons in 2015, according to official data.

China’s steel output will extend declines this year as the top leadership has endorsed the push to cut overcapacity, Cliffs Natural Resources chief executive officer Lourenco Goncalves told Bloomberg this week. The plan was backed Premier Li Keqiang, China’s number-two leader, Goncalves said.

 

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