Steeling for struggle: China’s laid-off workers face hunger

Hundreds of laid-off steelworkers gathered outside their former employer’s office this week to protest at losing their jobs, victims of a global glut. But the smokestacks nearby were not British; they are in China -- the very place blamed by European politicians for the plunging prices and excess capacity threatening the industry worldwide.

As recriminations fly over the closure of the Port Talbot steelworks, the pain of redundancy is felt as keenly in the northern Chinese steel hub of Tangshan as it is in Wales. “I have a daughter,” said one man, asking to remain anonymous for fear of reprisals. “I’m the main breadwinner in the family. What can I do in the future?” 

He was among 4,000 people who workers say face unemployment after state-owned steel firm Guofeng halted work at one of its hulking production zones last week, citing “uncontrollable factors”. They are just the tip of the iceberg; major Chinese steel producers lost more than 100 billion yuan ($15.5 billion) last year, an industry association said yesterday, and Beijing has said it will shed 500,000 steel jobs in coming years.

National production grew sevenfold from 2000 to 2014 as domestic demand boomed from massive infrastructure investment in swelling cities, and as the government ploughed billions of dollars into heavy industry to counter the impact of the 2008 global financial crisis. At the same time plants built by private investors expecting ever rising prices also went into operation.

By 2014, China was producing some 820 million tonnes a year -- about half the world total and seven times more than the second biggest producer, Japan. But domestic demand peaked the same year as China’s building boom began to wane and growth slowed, analysts say, causing commodity prices to plummet.

World export prices for steel have fallen more than 70 percent from an all time high of $1,113 per tonne in July 2008 to just $321 last month, according to the website steelbenchmarker.com. China can now produce about 1.2 billion tonnes of steel each year, but local demand is around 700 million tonnes, and companies have looked to foreign markets to make up the deficit, primarily in Asia. “In 2015 China exported about 100 million tonnes of steel products,” Cai Rang, chairman of the China Iron and Steel Research Institute Group told state media last month -- around twice as much as two years previously.

The exports were “a relief for domestic capacity but a shock to the international market”, he acknowledged. That shockwave played out when India’s Tata Steel announced last month it was selling the loss-making Port Talbot steelworks, with the possible loss of 4,000 employee positions and many more indirectly, triggering doom-laden warnings of worse to come for Europe’s steel industry.