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New Delhi: Steel companies in the country are likely to face margin pressure in the third quarter of FY25 as muted steel prices compress spreads, according to a report by Axis Securities. The report stated that the weak demand in China and higher exports from the country have been identified as key factors behind the decline in steel prices. The report highlighted that <keyword id="24048830" type="General" weightage="20" keywordseo="Chinese-steel-exports" source="keywords">Chinese steel exports</keyword> reached 92 million tonnes per annum (MTPA) between January and October 2024, marking a 22 per cent year-on-year increase. This has led to an oversupply in the global market, weighing down prices domestically. It said "Weak Chinese domestic demand along with higher Chinese exports has led to a decline in steel prices in India. Chinese steel exports from Jan'24 to Oct'24 stood at 92 MTPA, up 22 per cent YoY" In India, the average price of hot-rolled coil (HRC) steel in the trader's market in Mumbai fell by 8 per cent year-on-year and 6 per cent quarter-on-quarter to Rs 51,802 per tonne in the second quarter of FY25. Spot prices have further declined to Rs 49,000 per tonne, 5 per cent lower than the Q2FY25 average. The report also noted some signs of recovery in China's residential property sector, with increased transactions in major cities following policy measures aimed at boosting demand. However, challenges remain, as the three-month moving average of year-to-date floor space declined by 19 per cent year-on-year in September 2024, remaining in negative territory. It said "China's residential property sector is showing some signs of improvement with the transactions in major cities rising after recent policy measures introduced to boost demand". On the global front, the report noted that the probability of a 25-basis point rate cut by the US Federal Reserve in its December 2024 meeting has fallen to 58.9 per cent, down from 76.8 per cent in October 2024, owing to strong economic data from the US. Additionally, China has removed a 13 per cent export rebate on aluminum and copper, effective December 1, 2024, in response to anticipated tariff measures by the new US administration. These developments highlight the ongoing challenges and potential shifts in the global and domestic steel and metals markets.

Falling steel prices amid Chinese export surge, to reduce profits of companies in Q3 FY25: Report

Strong <keyword id="141166" type="General" weightage="20" keywordseo="domestic-demand" source="Orion">domestic demand</keyword>, supported by government spending on infrastructure, building and construction segments, is expected to keep <keyword id="3658" type="General" weightage="20" keywordseo="india" source="Orion">India</keyword>'s <keyword id="164590" type="General" weightage="20" keywordseo="steel-imports" source="Orion">steel imports</keyword> elevated around the 6 million tonne (MT) mark this financial year even as the global <keyword id="34570" type="General" weightage="20" keywordseo="steel" source="Orion">steel</keyword> industry battles a slowdown, according to rating agency Crisil. Global steel demand, which has been subdued since the onset of the Russia-Ukraine conflict, is expected to grow 1.6 per cent in 2023 after a sharp fall of 3.3 per cent in 2022, the rating agency said in a report. Indeed, even that tepid rate of growth rides largely on a buoyant 13 per cent growth in demand in India, which has bucked the trend so far. This fiscal, the steel sector in India is poised to clock its third consecutive year of double-digit growth, at 11-13 per cent year-on-year, after growing 11.4 per cent and 13.4 per cent in fiscals 2022 and 2023, respectively. According to the rating agency, demand in <keyword id="1334" type="General" weightage="20" keywordseo="china" source="Orion">China</keyword>, the world's largest producer of the commodity, has started reviving after a three-year slump. However, oversupply has led to subdued <keyword id="6366990" type="General" weightage="20" keywordseo="prices" source="Orion">prices</keyword>. "Over the past few months, Chinese mills have been facing margin pressure, mainly due to high raw material prices and a depreciating yuan. Although the Chinese government is trying to keep demand afloat with infrastructure spending and relaxing policies on property ownership, real estate continues to be in a recessionary phase," the rating agency noted. Chinese mills have started pushing volumes into the global market at highly competitive prices. Between January and November this year, exports from China increased by 35.6 per cent to 82.7 million tonnes -- the highest since 2016. Chinese exports to India have also surged. Strong growth momentum has supported steel prices in India, and import volumes have increased significantly, driven by better realisation opportunities. As of November this fiscal, India had imported 4.26 million tonnes of finished steel, up 13.4 per cent year-on-year even as its exports declined 6.2 per cent to 4.03 million tonnes, making the country a net importer of finished steel. Among the ports, Mumbai remains the preferred destination for both alloy and non-alloy imports, accounting for 40 per cent of the total imports, followed by Mundra and Chennai. "This imbalance of volume at the ports leads to regional disparities in domestic prices. For instance, although prices of flat products corrected across India in November, the fall in trader prices was more significant in Mumbai compared with other major domestic steel markets," the rating agency noted.

Firm domestic demand to keep India's steel imports elevated in 2023-24: Crisil

Last week, the President of the United States, <keyword id="19919748" type="General" weightage="20" keywordseo="joe-biden" source="keywords">Joe Biden</keyword>, announced significant tariffs on a range of <keyword id="20139085" type="General" weightage="20" keywordseo="Chinese-products" source="keywords">Chinese products</keyword> to protect American workers from unfair trade practices. The targetted measures include a 100% tariff on <keyword id="6354973" type="General" weightage="20" keywordseo="electric-vehicles" source="Orion">electric vehicles</keyword>, a 50% tariff on semiconductors and solar cells, and a 25% tariffs on batteries, steel and aluminium products, some critical minerals, and essential health equipment like medical gloves, syringes and needles. In his address from the Rose Garden of the White House, Biden said America can continue to buy any kind of car they want, "but we're never going to allow China to unfairly control the market for these cars. Period." He claimed that the Chinese government has been investing state funds in various Chinese companies for years, spanning industries across the above-mentioned sectors. How does this brewing geopolitical <keyword id="20736760" type="General" weightage="20" keywordseo="trade-war" source="keywords">trade war</keyword> impact <keyword id="20742235" type="General" weightage="20" keywordseo="Indian-firms" source="keywords">Indian firms</keyword>? Experts say the impact could be in two ways, benefitting some sectors, while harming the few others. Let’s start with the bad news. <cmsannotation type="cmsannotation" annotationid="Threat to Indian firms" comment="subhead" text="Threat to Indian firms">Threat to Indian firms</cmsannotation> Beijing offers significant subsidies on most of these products, leading to surplus production that exceeds domestic and even regular export demand. Subsequently, Chinese companies are known to flood the global markets with surplus products at unreasonably low prices, forcing local manufacturers out of business in many countries, including <keyword id="19895063" type="General" weightage="20" keywordseo="India" source="keywords">India</keyword>. A prime example of this in practice can be found in the steel sector, where weak domestic demand is pushing the world’s largest steel producer China to offload surplus production into Indian markets at cheaper prices. Indian steel manufacturers are already struggling to compete with a glut of cheaper Chinese steel, with shipments nearly doubling year-on-year in the financial year ending March 2024. “India is already under grave threat of import because all major steel consuming economies are shutting their doors on these steel producing countries. We are highly vulnerable to surging and predatory import,” said Alok Sahay, secretary general of the Indian Steel Association, to Reuters. Global trade experts say that a majority of Chinese products are sold at unreasonably low prices in global markets because the companies in these sectors do not have to worry about profits. They are heavily subsidised by the Chinese government. <keyword id="20279291" type="General" weightage="20" keywordseo="Steel-Authority-of-India" source="keywords" meta.keywordsubtype="org" meta.entityname="Steel Authority of India" meta.hostid="261" meta.entityid="Steel Authority of India">Steel Authority of India</keyword>’s (SAIL) chairman Amarendu Prakash also said that they are keenly watching Chinese imports after the US tariff increases. Additionally, China has been accused of employing anti-competitive strategies like compelling foreign companies to transfer their technology in order to operate in China. These factors have led to the US effectively shutting its door on several Chinese products through heightened tariffs, and other developed markets like Canada are also likely to follow suit. White House also emphasised that it continues to consult with its partners and allies who are facing similar threats from China’s unfair trade practices and are keen on taking action. If more and more global markets restrict entry of Chinese products, the risk of the majority of such products being dumped in neighbouring India increases drastically. Trying to block Chinese excess production "is like squeezing a balloon. It shrinks in one place and pops out in another," William Reinsch, a trade expert at the Center for Strategic and International Studies in Washington, tells Reuters. <cmsannotation type="cmsannotation" annotationid="An opportunity also arises" comment="subhead" text="An opportunity also arises">An opportunity also arises</cmsannotation> While some products risk being dumped into the Indian market, in a few other cases, Indian firms could benefit from fresh openings in the lucrative US market. "Of the products affected, India has opportunities in face masks, PPE, syringes &amp;needles, medical gloves, aluminium, iron, and steel. Opportunity may come in China also with retaliation, provided we have market access in products targeted by China," Ajay Sahai, Director General of the Federation of Indian Export Organisations (FIEO), told ANI. However, China is not likely to retaliate against the US tariffs at the moment, say experts, though the country’s Ministry of Commerce said it would take 'resolute measures to safeguard its own rights and interests' "China's economy is fragile. With household spending and the property market on the wane, manufacturing for export markets is one of its few bright spots. Beijing will not want to cut off its nose to spite its face. More broadly, China is desperately trying to encourage new foreign investment. Rash retaliatory action could spoil its case," Moody's Analytics explained in a recent report. Out of China's USD 420 billion exports to the US, only USD 18 billion is impacted due to the latest hike in tariffs — representing slightly over 4% and therefore considered marginal. But Sahai says that this market will continue to grow with time and provides an opportunity to India and other competitors to chip in the supply gap. Ajay Srivastava, the founder of the Global Trade Research Initiative (GTRI), also echoes Sahai’s opinions. He emphasised that the increased duties on Chinese face masks, syringes, needles, medical gloves, and natural graphite offer a substantial opportunity for India, as quoted by ANI. "By ramping up production and export of these in-demand products, India could enhance its trade footprint in the US market," he added. In terms of products like electric vehicles and semiconductors, India remains a net importer, and therefore, may not be in a position to capitalise right now. In the long term, however, as India begins semiconductor production at scale in 2025, there will be opportunities to export some of it to the US and other European countries, offering fresh impetus for domestic manufacturing. As the security risks associated with importing Chinese semiconductors prompts more and more trade barriers from the Western countries, demand for supply from India is likely to grow. Efforts are already underway for the establishment of four large semiconductor plants in India, with three located in Gujarat and one in Assam. Last fiscal year, Indian exports to the US dipped marginally by 1.32 per cent to $77.5 billion as against $78.54 billion in 2022-23. The new development now gives an unique opportunity to turn the tide over the next few years. Overall, some sectors like steel and aluminium do face a serious challenge due to the fresh US tariffs on Chinese products. However, the development will open new avenues for Western market entry and expansion for several other products. (With inputs from agencies)

US-China tariff war could benefit several sectors in India while harming a few others

Ah, <keyword id="18712" type="General" weightage="20" keywordseo="Gold" source="Orion">gold</keyword>! The shiny metal that's been making humans lose their minds since time immemorial. And yet, from King Midas to our neighbourhood aunty and even our moms (and secretly dads), everyone seems to have a super soft spot for the bullion. But here's the kicker: right now, gold prices are breaking all records on their upward trajectory! As of today, prices of 24k carat gold have passed the Rs 80,000 mark per 10 grams. And if experts are to be believed, this train isn't stopping anytime soon! So, as shiny as gold might look, adding even a bit of its glitter as we start decking up for the festive season might not be so easy on your pockets. But let's admit it—we love our gold and can't live without it. No wonder India is the second-largest consumer of the yellow metal in the world, only behind <keyword id="1334" type="General" weightage="20" keywordseo="China" source="Orion">China</keyword>. Such is our fondness for the metal that the <keyword id="20195223" type="General" weightage="20" keywordseo="world-gold-council" source="keywords">World Gold Council</keyword> had to up our 2024 annual demand forecast to 850 tonnes, up from the previously estimated 750 tonnes. However, our love for gold isn't just about looking fabulously embellished and blinding people with its bling. Indians also see gold as a long-term, trusty investment, supporting our other hard-earned assets, especially when high <keyword id="22195" type="General" weightage="20" keywordseo="Inflation" source="Orion">inflation</keyword> rates pull our returns down. After all, while inflationary pressures generally weaken the purchasing power of our regular paper money, gold is built differently. When the world is buckling to inflation, gold gains value during these times. This is also why it is considered a solid hedge against inflation. With Diwali and Dhanteras knocking at our doors, the inflation demon continued to bother India like a guest who refused to leave. Just last month, the Consumer Price Index (CPI) stood at 5.49%, much higher than the anticipated levels. Moreover, the diverging policy stances among central bankers worldwide, growing geopolitical tensions, tough job markets, and extreme weather events are only adding to the uncertainty. In such economically uncertain times, what should your gold strategy be this festive season? To buy or not to buy, that is the question. Well, let’s get to it. <h2><keyword id="20050894" type="General" weightage="100" keywordseo="gold-etfs" source="keywords">Gold ETFs</keyword> to the rescue</h2>See, buying physical gold jewellery is certainly a flex, but also a financial fuss. First, you pay a heavy amount to buy gold. Not to mention all those extra, hefty jewellery-making charges. And then you pay even more money to keep it safe in a bank locker, lest it get stolen. But what if we tell you that you can own pure <keyword id="3311599" type="General" weightage="20" keywordseo="24K-gold" source="Orion">24k gold</keyword>, minus all these frills? Welcome, Gold ETFs (Exchange Traded Funds). Simply put, gold ETFs are like the cool cousins of your traditional gold investments. Instead of stashing gold bars under your mattress like those maniac millionaires we see in Bollywood films, you can now invest and trade in gold through the stock market. It's basically buying units of an ETF on the stock exchange that directly mirror the ongoing domestic prices of gold. Generally, gold ETFs are equivalent to 99.5% pure physical gold bars, and each ETF unit denotes actual, one gram of gold. And let's face it, who would not want that golden glow in their lives? Gold ETFs have witnessed an over seven-fold surge in their AUM (assets under management) in just the last five years. From Rs 5,613.22 crore in September 2019 to Rs 39,823.50 crore in September 2024, gold ETFs seem to be in-thing. Inflows in gold ETFs have shot up by a whopping 2,695% over the last 5 years. In September 2019, gold ETFs had garnered a mere Rs 44.11 crore. Compare that to the inflows worth Rs 1,232.99 crore gold ETFs received last month. Talk about growing, or glowing popularity! In fact, in just 2024, inflows in gold ETFs have surged by nearly 88% since the beginning of this calendar year. From Rs 657.46 crore in January 2024 to Rs 1,232.99 crore in September 2024, good old gold is never out of season. <h2>So, how do these ETFs work? Should I invest in them now?</h2>All you need is a Demat account. Log into your account, choose the gold ETF scheme you want to invest in, and voila! You’re now a bullion-aire! All your gold ETF units will be stored in this account. Then, you can buy and sell gold ETFs just like you buy shares—in real-time. So, if gold prices inch upwards, which is where gold is currently going, the value of your ETF units will also rise in lockstep. Ashwini Kumar, Senior Vice President and Head of Market Data at ICRA Analytics, says that of late, gold ETFs have been increasingly gaining popularity among investors due to the liquidity, safety and transparency they offer. "With the escalating global geopolitical tensions boosting the ‘safe-haven’ appeal of the bullion, investors are preferring to park their funds in gold ETFs as compared to investing in physical gold, as there is no hassle of storing it. The heightened activity in gold ETFs is also driven by the prospects of an imminent further interest rate cut by the <keyword id="20078761" type="General" weightage="20" keywordseo="u-s-federal-reserve" source="keywords">U.S. Federal Reserve</keyword> in the coming months,” he added. “Investors with a short- to medium-term investment horizon may consider investment through gold ETFs. A buy-on-dips strategy here may help investors capitalise on a temporary correction in prices. Also, given the current market dynamics where equities are showing mixed trends, a modest, 5-10% allocation to gold may serve as a hedge against inflation and market volatility, which may help you balance risks in an optimum manner,” Kumar noted. <h2> Wait, there is no dearth of options</h2>But if ETFs make you go WTF, there’s always digital gold. You can invest in the yellow metal without actually physically holding it for as low as Rs 1. The best part? You can buy or sell this gold 24 X7 seamlessly via multiple apps without having to pay storage costs. On your behalf, your gold is stored in insured vaults by the seller. But remember, digital gold continues to remain unregulated territory in the country, where you venture at your own risk. In 2021, market watchdog SEBI had even asked its members to desist from selling digital gold. Then there are gold mutual funds and the Sarkari SGBs, or sovereign gold bonds. While gold mutual funds invest primarily in gold ETFs, SGBs are issued by the <keyword id="19899808" type="General" weightage="20" keywordseo="rbi" source="keywords">RBI</keyword> and are also a reliable substitute for holding physical gold. However, with the RBI currently putting brakes on issuing SGBs, investing in them is out of the question. Plus, you should only get your hands on SGBs if you're in for the long haul. Apart from a 2.5% p.a. interest, you don't have any yearly earnings from them. Moreover, no premature redemption is allowed before 5 years, and you'll have to wait a good 8 years to maximise your returns. <h2> Okay, tell me about returns</h2>In contrast, the seventeen gold ETF schemes currently present in the market offer an average one-year return of 29.12%. Stay with it a little longer, and you can end up with returns worth 16.93% and 13.59% over a 3 and 5-year period, respectively. If you look at it, these returns are comparable with the returns delivered by actual, physical gold. Data from Value Research indicates that gold, as a commodity, has delivered returns worth 27.24%, 16.53%, and 14.18% over a 1, 3, and 5-year period, respectively. So, worth investing, right? <h2>What are the risks?</h2>See, stock markets are as unpredictable as monsoons in Mumbai. One significant market correction can wash away your returns, and one sunny day or an upswing can leave you wallowing in wealth. Since your gold investments are directly linked to these markets, you should steel yourself up for some volatility. Plus, international gold prices are in dollars. So, if our rupee decides to take a nosedive, your returns might look a bit tarnished. Also, know that your ETF might not always perfectly mirror gold prices, which is also known as a tracking error. It's like expecting your Zomato-ordered food to look exactly like the picture on the menu—it's close, but not quite. Then there’s the taxation bit. The budget this year brought down the <keyword id="20552259" type="General" weightage="20" keywordseo="ltcg" source="keywords">LTCG</keyword> (long-term capital gains tax) on gold ETFs from the previous 20% to 12.5% (sans indexation). LTCG is what you pay if you sell your ETF units after 12 months. If you sell your gold ETF units within a year and make handsome returns, the tax you’ll have to pay will be equivalent to your income tax slab rate. <h2>Is gold just for old?</h2>A survey by fintech firm Moneyview thinks otherwise. Per their findings, over 85% of the 3,000 respondents it talked to considered gold to be a valuable asset for wealth preservation, with its intrinsic value and historical performance continuing to drive consumer confidence. Particularly, young investors in the age group of 25–40 years are also investing in gold via both physical and digital ways to build wealth for retirement and other long-term goals. So, young or old, everyone’s going for gold. So, this festive season, with gold prices going north, investing in gold can add that much-needed glitz to your financial attire. But remember, don't go overboard since gold isn't exactly a high-return-yielding asset. But whether you're a seasoned investor looking to diversify or a newbie trying to make their way in the markets, investing in gold offers you a glittering safety cushion. Just remember, while gold can make your portfolio shine, it's your smart investment decisions that truly make you golden. Disclaimer: The content on this website is for informational purposes only and should not be construed as investment advice. We recommend readers consult certified, qualified, and registered advisors for professional and personalised financial advice.

Can investing in gold this festive season add the much-touted Midas touch to your investments?

The Indian <keyword id="80584" type="General" weightage="20" keywordseo="steel-sector" source="Orion">steel sector</keyword> has enjoyed a multi-year demand surge which will continue in the current FY'24 but it is expected to moderate in the coming fiscal, global analytics company Crisil said. The sector has witnessed double digit demand growth rate of 11 to 13 per cent during three consecutive years and is likely to moderate to 3 to 5 per cent in FY'25, Miren Lodha, Director Research, Crisil Market Intelligence and Analytics said on Friday. "We are clearly in the midst of a demand supercycle," Lodha told PTI. The moderation is likely in the long <keyword id="34570" type="General" weightage="20" keywordseo="steel" source="Orion">steel</keyword> segment in FY'25 ahead of the general election. The only other instance of such a demand surge in the last two decades was between 2006 to 2008, he said. Lodha said the <keyword id="17408" type="General" weightage="20" keywordseo="infrastructure" source="Orion">infrastructure</keyword> sector, a key driver of the steel demand, is expected to maintain its momentum fuelled by ongoing government projects. The infrastructure segment has been driving a lot of momentum in the steel demand and is expected to continue in the coming years. However, government schemes like the Pradhan Mantri Awas Yojana are nearing conclusion, which could slow down the demand momentum in the steel sector, he said. Lodha said the recent surge in steel imports, which has been prompted by lower Chinese prices and strong Indian demand, has raised concern among the domestic manufacturers. "The disparity between import and <keyword id="124052" type="General" weightage="20" keywordseo="domestic-prices" source="Orion">domestic prices</keyword> has triggered significant imports," he elaborated. But it will self correct in the long run with the ongoing capacity addition. "New steelmaking capacity of 12-13 million tonnes is expected to come online in the second half of fiscal 25, aligning production with demand and reducing import dependence," Lodha said. Additionally, the potential demand improvement in China after the Lunar New Year coupled with expected production cuts, could further curb Chinese exports to India. Overall the Indian steel sector's outlook remains positive, albeit with a projected dip in demand next year. The industry's focus will be on ramping up domestic production and tackling import concerns to maintain a robust long-term growth, he added.

Indian steel demand boom to continue this fiscal : Crisil

<ul class="summary-list"><li>August economic data shows China's policy moves haven't acted quickly enough, Goldman Sachs says.</li><li>The strategists pointed to weak retail sales and potential labor market pressures.</li></ul>China's economy can't seem to catch a break, and Beijing's policy interventions haven't done much to help. Analysts at Goldman Sachs downgraded their forecast for China's GDP growth from 4.9% to 4.7% — notably lower than the country's target of "around 5%" for the year.The strategists pointed to weak economic data from last month, with further contracting retail sales and potential labor market pressures. These data points show China's economic policies have been ill-timed, the strategists say."Although macro policies have started to ease, they are too slow and reluctant. As a result, the Chinese economy faces more challenges today than even just a few months ago as confidence continues to erode," the analysts said in a Sunday note.China's slow and incremental monetary, fiscal, and housing policies from the past year have created cycles that promise further weakening ahead, the analysts said.They pointed in particular to China's efficiency pushes in manufacturing, which are driving strong exports but likely hurting the labor market as the number of jobs created by GDP output trends down."For both structural and cyclical policies, the speed of implementation matters as much as the direction of these policies. Pushing high-tech manufacturing and automation too quickly without strengthening unemployment support may lead to labor market pressures," the analysts explained.If the labor market continues to cool, it could further hurt China's <a target="_blank" href="https://www.businessinsider.com/china-exports-imports-trade-overcapacity-demand-prices-overseas-sales-2024-9">already-slow domestic demand</a>, they said.Other negative feedback loops include China's elevated real interest rates, which weigh on demand and price inflation, thus lowering inflation expectations and further increasing real interest rates. That creates a cycle of increased rates, the analysts say.China's failure to respond to local governments' financial crises is also stirring up potential headwinds. Local governments, faced with financing pressures amid a <a target="_blank" href="https://www.businessinsider.com/china-economy-housing-market-real-estate-crash-investors-outlook-construction-2024-3">tough property market </a>and continued fallout from earlier spending on Covid-control measures, are implementing tightening policies to make ends meet. Those policies further depress demand and reduce revenue, the analysts said."The longer policies stay hesitant and the more often policy implementation disappoints, the more pessimistic households, businesses and investors become," the analysts said.Falling home prices, meanwhile, are keeping homebuyers out of the market and pushing prices down further. The sluggish housing market is also having spillover effects on steel and cement production, which saw year-over-year declines in August and helped drive down overall retail sales, the strategists say."Because of these negative feedback loops, the longer the central government waits, the higher the cost it may eventually have to absorb to shore up demand and confidence," they said.The analysts add to a growing chorus <a target="_blank" href="https://www.businessinsider.com/china-economy-growth-consumer-spending-demand-real-estate-debt-crisis-2024-8">sounding the alarm on China's growth</a> in recent weeks. Last week, economist Yingrui Wang said China <a target="_blank" href="https://www.businessinsider.com/china-growth-targets-axa-investment-property-sector-industrial-production-2024-9">most likely won't reach its growth targets by year-end</a>, pointing to a slowdown in industrial production and continued weak consumer sentiment.

China can't boost its economy because its macro policy is 'too slow and reluctant,' Goldman Sachs says

<ul class="summary-list"><li>US President President Biden has called for a tripling of tariffs on Chinese steel and aluminum.</li><li>China is now exporting the most steel since 2016, when it was accused of causing a global glut.</li></ul>US President Joe Biden last week <a target="_blank" href="https://www.businessinsider.com/biden-sells-blue-collar-workers-american-dream-failing-china-steel-2024-4">called for</a> a tripling of tariffs on Chinese steel and aluminum imports, echoing former <a target="_blank" href="https://www.businessinsider.com/trump-tariff-china-trade-war-consumer-goods-2018-9">President Donald Trump's levies</a> on a range of goods from China.Biden — who is the frontrunner for the Democratic Party's presidential nominee — said China's steel production was backed by state funds, which enable the commodity to be sold cheaply to the US. He wants to hike a key tariff on Chinese steel and aluminum from 7.5% to 25%.Trump — who is the GOP's frontrunner — said in February he would slap tariffs of over 60% on Chinese goods if he's elected.The one-upmanship between the two is likely to get more intense this election year as China's economy struggles to consume all that it's producing.<h2>China is now exporting the most steel since 2016</h2>Already, China is exporting the most steel since it was accused of <a target="_blank" href="https://www.bloomberg.com/news/articles/2016-09-03/global-steel-glut-said-to-be-mentioned-in-g-20-draft-communique">causing a glut</a> nearly a decade ago.In March, China exported 9.9 million metric tons of steel — about 25% higher than a year earlier and the highest since 2016, according to a <a target="_blank" href="https://www.bloomberg.com/news/articles/2024-04-12/china-steel-exports-hit-highest-since-2016-on-weak-local-demand">Bloomberg analysis</a> of official data earlier this month.The surge in exports followed a slump in China's real-estate sector that has cut demand for the building material."Steel, cement, and construction machinery are some of the worst-hit sectors, with excess capacity stemming from structural contraction in demand," Chim Lee, a China analyst at the Economist Intelligence Unit, wrote in an April 15 note.However, the US isn't a large Chinese steel importer. The country is the <a target="_blank" href="https://www.reuters.com/markets/commodities/chinas-steel-sector-has-bigger-worries-than-biden-tariff-hike-2024-04-19/">seventh-largest steel shipper</a> to the US, so Biden's threat is mostly symbolic."I want fair competition with China, not conflict, and we're in a stronger position to win the economic competition of the 21st century against China or anyone else," Biden said last week.<h2>Trade tensions will be high this election year</h2>Beijing hit back against Biden's criticism of China's industrial policy and accused the US of electioneering.Lin Jian, a <a target="_blank" href="https://www.fmprc.gov.cn/eng/xwfw_665399/s2510_665401/2511_665403/202404/t20240419_11285233.html">Chinese foreign ministry</a> spokesperson, said at a Friday press conference that the American president's comments were "far-fetched."Lin added that China's steel sector is geared toward meeting domestic demand and doesn't receive any export-oriented subsidies. He also accused the US of a "double standard" for implementing domestic subsidies and for using export controls on the pretext of national security."We urge the US to be prudent in its words and deeds, stop manipulating issues on China in the election year, stop turning economic and trade issues into security ones, lift additional tariffs on China, and stop imposing new ones," said Lin.Still, China's current wave of steel exports is already spooking some countries, including <a target="_blank" href="https://www.bloomberg.com/news/articles/2024-04-21/chile-slaps-tariffs-on-chinese-steel-to-bolster-local-industry">Chile</a> and <a target="_blank" href="https://www.bloomberg.com/news/articles/2024-04-23/brazil-joins-protectionist-wave-in-face-of-cheap-steel-imports">Brazil</a> that have, respectively, imposed higher temporary tariffs and import quotas on the commodity.<a target="_blank" href="https://www.businessinsider.com/china-economy-overcapacity-dumping-manufacturing-exports-economic-woes-world-yellen-2024-4">US Treasury Secretary Janet Yellen</a> slammed China's overproduction earlier this month, saying the problem went beyond the US."China is now simply too large for the rest of the world to absorb this enormous capacity," said Yellen during her visit to China.With the US election ahead and China's economy in a <a target="_blank" href="https://www.businessinsider.com/china-two-speed-economy-sectors-thriving-new-three-green-sustanability-travel-2024-2">painful transition,</a> it'll be a tough year for <a target="_blank" href="https://www.businessinsider.com/us-china-relations-more-engagement-not-more-trust-taiwan-clash-2024-4">trade relations</a>."Trade tensions related to steel and construction machinery will be high in 2024," wrote the EIU's Lee.

Biden is fighting Trump's tough tactics by calling for tripled tariffs on Chinese steel imports

<ul class="summary-list"><li>China's EV industry is booming — but it could be about to face a painful reckoning.</li><li>Price wars and slowing demand are putting Chinese EV players under pressure. </li></ul><a target="_blank" href="https://www.businessinsider.com/china-xi-jinping-crush-tesla-elon-musk-american-ev-industry-2024-2">China's EV industry has boomed</a> over the last few years — but it could soon face a painful reckoning.The International Energy Agency <a target="_blank" href="https://www.iea.org/reports/global-ev-outlook-2024/trends-in-electric-cars">wrote in a recent report</a> that despite EV adoption in China being expected to grow to 45% this year, there are still "far more EV companies in China than can possibly survive in a competitive market.""In 2014 alone, ten years ago, over 80,000 companies registered in China entered the electromobility sector. In 2023, over 80% of electric car sales in China were concentrated in just over 30 companies," it read.China's EV market is known for being brutally competitive, with around <a target="_blank" href="https://www.businessinsider.com/china-tesla-electric-vehicle-market-dominance-competition-byd-aion-wuling-2024-4">123 companies jockeying for customers</a>. Executives and experts are warning that the number of players will likely shrink in the coming years, with economic headwinds piling the pressure on electric vehicle manufacturers.The IEA report concludes that China's EV market will likely coalesce around a handful of "robust champions."Some Chinese EV CEOs have echoed that sentiment, and are steeling themselves for what Xpeng boss He Xiaopeng described as a <a target="_blank" href="https://www.cnbc.com/2024/02/19/xpeng-plans-to-hire-4000-people-invest-in-ai.html">"knockout round" that could end in a "bloodbath"</a> with prices continuing to drop even as growth slows."It is not correct for a startup firm to chase idealism," said William Li, CEO of Tesla rival Nio said at a media briefing in December, per <a target="_blank" href="https://finance.yahoo.com/news/chinese-ev-makers-face-day-093000058.html">The South China Morning Post</a>."Nio, as an EV business, has to face the grim reality and try to dodge the bullet as market competition intensifies," he added.<div type="image" title="He Xiaopeng" height="681" width="1024" msid="110421205" hostid="261" sizebytes="47422"></div><h2 id="a7b9f4d3-4343-4d28-b655-4fbe03c46881">Consolidation looming</h2>This pessimism is rooted in expectations that <a target="_blank" href="https://www.businessinsider.com/china-electric-cars-ev-elon-musk-tesla-byd-price-war-2024-4">the rapid pace of EV adoption in China will slow this year</a>, as the Chinese economy struggles with <a target="_blank" href="https://www.businessinsider.com/china-economy-debt-property-market-crisis-fitch-downgrade-xi-jinping-2024-4">rampant deflation and an ongoing property crisis</a>.According to China's Passenger Car Association, sales of new energy vehicles are expected to rise by 25% in 2024, down from 36% the year before.Two of China's biggest automakers, BYD and Li Auto, both recently reported mixed first-quarter earnings. BYD sold <a target="_blank" href="https://www.bbc.co.uk/news/articles/c9rznkq3vqro">300,000 battery EVs in the first three months of the year</a>, a drop from a record 526,000 in the previous quarter.Li Auto, meanwhile, saw vehicle sales and net income <a target="_blank" href="https://www.bloomberg.com/news/articles/2024-05-20/li-auto-sales-disappoint-amid-tepid-demand-for-pure-electric-car">fall short of analyst targets</a> and cut delivery targets for its new battery-electric van after it failed to sell as well as expected.Slowing demand has sparked a brutal price war initiated by <a target="_blank" href="https://www.businessinsider.com/tesla-waging-price-war-against-chinese-rivals-2024-4">Elon Musk's Tesla</a>. The automaker started cutting the prices of some of its Chinese models in 2022 and has continued since then, forcing local rivals to retaliate and slash their own prices to keep up.It has also led to fears of overcapacity, with <a target="_blank" href="https://www.businessinsider.com/eu-chinese-ev-subsidies-market-cheap-prices-cars-2023-9">healthy subsidies for the EV industry</a> leading to a glut of new factories being built over the past few years.Many of them now sit empty, with China's National Bureau of Statistics estimating that capacity utilization across the auto industry was at 65% in the first three months of this year, down from 75% in 2023 and 80%-plus before the Covid-19 pandemic, according to <a target="_blank" href="https://www.nytimes.com/2024/04/23/business/china-auto-factories-price-cuts.html">The New York Times</a>.This has put increasing financial pressure on China's EV makers, many of whom have accumulated losses as they have rapidly scaled up their businesses.<div type="image" title="William Li" height="683" width="1024" msid="110421207" hostid="261" sizebytes="61448"></div>Nio, for example, has never turned a profit and reported a <a target="_blank" href="https://ir.nio.com/news-releases/news-release-details/nio-inc-reports-unaudited-fourth-quarter-and-full-year-2023#:~:text=Net%20loss%20for%20the%20full,US%242%2C584.6%20million)%20in%202023.">$2.9 billion loss last year</a>. Rival Xpeng posted a narrower-than-expected <a target="_blank" href="https://www.bloomberg.com/news/articles/2024-05-21/xpeng-quarterly-loss-narrows-but-outlook-shows-tough-times-ahead">net loss of 1.41 billion yuan ($195 million)</a> for the first three months of 2024, delivering 21,821 vehicles.Regulators have issued their own warnings. Xin Guobin, vice minister of industry and information technology, <a target="_blank" href="https://www.ft.com/barrier/corporate/9f5c1249-c9df-4015-9ec5-a4d83edbbf73">cautioned</a> against expansion in the face of "insufficient" consumer demand for EVs and said Beijing would take "forceful measures" to address "blind" construction of new EV projects."There are a lot of EV companies in China. The average volume per brand is very low, not sustainable, and so there will be eventual consolidation," Stephen Dyer, head of Asia auto and industrials consulting at Alixpartners, told Business Insider.Dyer said consolidation would likely be a protracted process, with investors and local governments reluctant to let EV companies die.But he added that only "a handful" of Chinese firms are likely making a profit on their EV business, meaning a crunch is inevitable."Among the little over 120 EV brands that are selling EVs in China, we think about 20 to 30 will probably be financially viable in the long term," he added.<h2 id="c6a2473c-6b6f-4c7f-85e3-20da35e2afc6">The red ocean</h2>There are signs this thinning of the herd has already begun.Several smaller Chinese EV makers have run into financial difficulties in recent months, with <a target="_blank" href="https://www.bloomberg.com/news/articles/2023-10-10/chinese-ev-startup-wm-motors-seeks-bankruptcy-in-shanghai-court">Shanghai-based WM Motor</a> filing for pre-restructuring last October and the company behind the premium EV brand HiPhi <a target="_blank" href="https://www.bloomberg.com/news/articles/2024-02-19/chinese-ev-maker-hiphi-suspends-operations-for-six-months">suspending production</a> in February for at least six months.<div type="image" title="AIways" height="683" width="1024" msid="110421210" hostid="261" sizebytes="105650"></div>Tencent-backed Aiways, meanwhile, is reportedly moving its operations from China to Germany, with <a target="_blank" href="https://www.autocar.co.uk/car-news/business-electric-vehicles/chinese-ev-brand-aiways-moves-germany-escape-price-war">sources familiar with the matter telling Autocar</a> the move was due to intense competition and pricing pressure back home.EV parts suppliers are also feeling the squeeze as car makers take longer to pay the bills.Bloomberg reported this month that both Nio and Xpeng are <a target="_blank" href="https://www.bloomberg.com/news/articles/2024-05-19/china-s-ev-makers-taking-longer-to-pay-bills-amid-rising-stress?srnd=technology-vp">taking longer to clear their receipts payable</a> — something Alvarez &amp; Marsal consultant Lin Zhu warned was pushing smaller suppliers to the brink."We've seen more car components producers approaching us to improve their performance and some of them are thinking about offloading unprofitable businesses," Zhu told Bloomberg."The weak ones in the supply chain will face a high risk of being kicked out of the game," she added.The pain is even more severe for foreign automakers, who have seen their position in China <a target="_blank" href="https://www.bloomberg.com/news/articles/2024-05-13/japan-s-carmakers-look-to-china-tech-to-claw-back-market-share">gradually decline in favor of local manufacturers</a>."It is a matter of existing at the moment. It's becoming more and more difficult for European manufacturers in China," Linda Jackson, CEO of French brand Peugeot, told the Financial Times Future of the Car Summit. Peugeot did not respond to BI"s request for comment on whether it is currently selling EVs in China. "To be there, you either enter into what I would call the red ocean (of losses), or you stand back, reduce your volume and wait to see where the market goes," she said."There will be consolidation, even in the Chinese market … a large majority of Chinese electric vehicle startups are not making any money," Jackson added.<h2 id="1a28705a-6e10-4746-99f4-1c56ab12633c">A fight to survive</h2><div type="image" title="BYD Seagull" height="683" width="1024" msid="110421212" hostid="261" sizebytes="90798"></div>Paul Li, the CEO of China-based EV tech firm U-Power, told BI that Chinese EV companies needed to change their business models to become profitable and avoid extinction.This means developing vehicles with an "EV methodology," he said, by <a target="_blank" href="https://www.businessinsider.com/chinese-ev-makers-battle-for-market-dominance-with-smart-features-2024-5">prioritizing intelligent vehicles and new features</a> rather than simply converting combustion engine vehicles into electric models.He also said they needed to find new ways to profit from their vehicles after the initial purchase, as EVs require less maintenance and <a target="_blank" href="https://www.lek.com/insights/ind/us/ei/impact-electric-vehicles-aftermarket">fewer part replacements than gasoline vehicles</a>."The carmakers can find a lot of new ways to make a profit rather than just selling the car," Li said."Batteries can become a service, charging can become a service, finance, insurance, and autonomous driving can all become a service," he added.Ultimately, the biggest challenge Chinese EV makers face is differentiating themselves from the hundred-plus other companies fighting for customers — and until they do, the price war will likely continue, Stephen Dyer of AlixPartners told BI."Most of the companies are not clearly differentiated. And if your product is not differentiated, it is going to end in a price war," he added.

China's EV market could soon face a brutal reckoning

The US remains the top destination for <keyword id="3658" type="General" weightage="100" keywordseo="india" source="Orion">India</keyword>'s engineering goods exports in the financial year 2022-23 with total shipments value recording 6.8 per cent year-on-year growth to USD 18.67 billion. The other key markets, which registered positive growth, include the UK, Germany, Singapore, Saudi Arabia, Mexico, and Indonesia. Exports of engineering goods to China continued a downward trend month after month. In FY23, engineering shipments to China fell by 52.4 per cent year-on-year to USD 2.63 billion from USD 5.53 billion in the previous year. The other top markets that recorded negative growth during the year included UAE, Turkey, and Thailand. After reaching their all-time high at USD 112.16 billion during fiscal 2021-22, engineering exports from India finished fiscal 2022-23 at USD 107.04 billion, a decline of 4.57 per cent. In terms of the <keyword id="6355302" type="General" weightage="80" keywordseo="rupee" source="Orion">rupee</keyword>, however, engineering exports recorded 2.77 per cent growth year-on-year. This disparity was due to the substantial year-on-year depreciation of the rupee vis-a-vis the US Dollar in 2022-23. Geo-political crisis in the CIS region led by the Russia-Ukraine war, the economic slowdown in North-East Asia especially China, the crisis in South-East Asia, and the slowdown in Europe are the major factors responsible for the lower shipment of engineering goods from India during FY23. "The decline was a direct result of the depressed global demand, especially in the metal sector. FY23 in general has been a difficult year for global trade. While the end of FY22 marked the recovery from the COVID pandemic it was soon overshadowed by the Russia-Ukraine crisis which dented the European and Central Asian economies to a significant extent," said EEPC India Chairman Arun Kumar Garodia. He further said the decline could have been sharper if timely government measures had not been made. "We appreciate the efforts made by the Ministry of Commerce which has always been forthcoming in coming up with relief measures. Besides, the encouraging words by Hon'ble Prime Minister <keyword id="2082035" type="General" weightage="50" keywordseo="shri-narendra-modi" source="Orion">Shri Narendra Modi</keyword> have had a catalytic effect. We are grateful for the launch of the Foreign Trade Policy 2023 which covers all important aspects of trade including ease of doing business, introduction of Rupee trade, including the states and the districts in export strategy, export incentives, and infrastructure and logistics," said Garodia. According to the Quick Estimates of the Commerce ministry of the Central government, the share of engineering exports in India's total merchandise exports during fiscal 2022-23 was 23.92 per cent as against a higher 26.58 per cent in fiscal 2021-22. Panel-wise analysis showed that out of 34 engineering panels, 22 recorded growth in exports during 2022-23 while 12 conceded a decline in shipment. <keyword id="953254" type="General" weightage="80" keywordseo="iron-and-steel" source="Orion">Iron and steel</keyword> were the main spoilsports behind the decline in engineering exports with a 41.52 per cent decline in exports during 2022-23 over the previous fiscal. Excluding the iron and steel panel, engineering exports in 2022-23 recorded 4.91 per cent growth over the previous fiscal. Among the major panels, 'Motor Vehicles/Cars', 'Products of Iron and Steel', 'Electric Machinery and Equipment', 'Industrial Machinery', "Medical and Scientific Instruments', 'Ships, Boats, and <keyword id="1992685" type="General" weightage="50" keywordseo="floating-structures" source="Orion">Floating Structures</keyword>' and 'Auto Components/Parts' recorded higher shipments over the previous fiscal while basic metals like Iron &amp; Steel, 'Aluminium and products' and 'Copper and Products' recorded a decline in shipments. Indian engineering exports continued to decline for the fifth straight month to March 2023 and for eight months in fiscal 2022-23. During March 2023, engineering exports declined by 7.49 per cent to USD 10.19 billion from USD 11.01 billion in March 2022. As many as 16 out of 34 engineering panels witnessed positive year-on-year growth in March 2023, while the remaining 18 panels witnessed negative growth in exports. Major engineering products like Iron and Steel, Products of Iron and Steel, Aluminium and products, Industrial Machinery, Electrical Machinery and Equipment, Two and Three wheelers, Bicycle parts, Auto Tyres, and Hand tools witnessed a decline in exports during March 2023 vis-a-vis March 2022. Excluding the export of iron and steel, engineering exports recorded a 3.26 per cent year-on-year decline in March 2023. Global trade sentiments continue to remain bleak, WTO economists in April 2023 said in a new forecast that merchandise trade is expected to grow 1.7 per cent as against 2.7 per cent last year. The subpar performance will be mainly due to the Ukraine crisis, high inflation, tighter monetary policy, and financial market uncertainty. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/news/bengaluru-localities-see-the-highest-surge-in-residential-rents-in-q1-2023/articleshow/99640732.cms">Bengaluru localities see the highest surge in residential rents in Q1 2023: Anarock</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/india/news/on-camera-crimes-society-celebrating-them-worries-criminologists/articleshow/99640707.cms">On-camera crimes &amp; society celebrating them worries criminologists</a>

India's export of engineering goods to US grows by 6.8%, China's falls by 52.4%

<keyword id="64275" type="General" weightage="20" keywordseo="jindal-stainless" source="Orion">Jindal Stainless</keyword> Ltd (<keyword id="74606" type="General" weightage="50" keywordseo="jsl" source="Orion">JSL</keyword>) on Thursday said its consolidated net profit has more than doubled to Rs 764.03 crore in the September quarter, on the back of higher income. It had clocked Rs 347.02 crore net profit in the year-ago period, JSL said in a regulatory filing on Thursday. The company's total income increased to Rs 9,828.97 crore in the second quarter of the current fiscal as against Rs 8,776.61 crore a year ago. JSL's expenses were at Rs 8,944.04 crore, higher than the Rs 8,335.52 crore it reported a year ago. In a separate statement, JSL Managing Director Abhy per cuday Jindal, said, "Our domestic sales increased year-on-year (y-o-y), buoyed by the government's push for stainless steel in strategic sectors." "As we wait for the <keyword id="19198542" type="General" weightage="50" keywordseo="national-stainless-steel-policy" source="Orion">National Stainless Steel Policy</keyword>, we are confident that the per capita consumption of stainless steel in India will increase from the current 2.8 kg in the coming years," he said. Chinese imports have increased by nearly 55% year-on-year, which highlights the unchecked dumping of subsidised and substandard Chinese products in the Indian market, the MD said. The industry expects the government to take notice of the continuously increasing imports from China, which is hurting the sector, especially the MSMEs and as well the government's vision of an Atmanirbhar Bharat, he added. During the September quarter, the company's earnings before interest, taxes, depreciation, and amortisation was at Rs 1,231 crore, up by 80% y-o-y. "The board also approved the proposal to explore the option for selling/liquidating/divesting equity stake in its subsidiary, PT Jindal Stainless, Indonesia (PTJSI), at Gresik, Indonesia," the statement said. "The decision was taken in the wake of unfavourable market conditions in Indonesia due to the lack of a level-playing field and competition with Chinese products," it said. Most of the Indonesian market is dominated by Chinese players, and therefore, major markets such as the US and the EU have levied severe trade protection measures on exports of stainless steel products from Indonesia. The Board of Directors also approved an interim dividend Re 1 per equity share (face value of Rs 2 each) for FY24. The record date for determining the entitlement of shareholders has been set as October 28. The dividend shall be paid on or before November 17, the company said, adding that the aggregate payout will be nearly Rs 82.34 crore. The sales volume for the second quarter stood at 543,619 metric tonnes, up by nearly 26% y-o-y, owing to robust domestic demand. Ahead of the upcoming festive season, the company's sales in the auto segment -- besides other consumer-facing segments -- witnessed an uptick, the statement said.

Jindal Stainless Q2 net profit more than doubles to Rs 764 crore

When Tesla CEO Elon Musk was asked in 2011 about the Chinese electric-car maker BYD — a <a target="_blank" href="https://markets.businessinsider.com/news/stocks/byd-stock-sales-warren-buffett-berkshire-hathaway-china-ev-munger-2023-11">Warren Buffett-backed</a> company focused on cheaper eclectic vehicles with a name short for Build Your Dreams — he simply laughed it off. "Have you seen their car?" <a target="_blank" href="https://www.bloomberg.com/news/videos/2023-12-27/in-2011-tesla-ceo-musk-mocked-chinese-competitor-byd-video">he said with a giggle to Bloomberg TV</a>, adding that BYD didn't "have a great product" and "the technology is not very strong."Musk's juvenile expression of hubris was (and still is) singular, but his belief that China's automakers were not a threat was shared across the US auto industry at the time.A lot can change in 13 years. BYD eclipsed Tesla in 2023 as the best-selling EV maker in the world. One out of every three electric cars sold is made by the company, up from <a target="_blank" href="https://www.bloomberg.com/news/features/2023-06-26/china-s-electric-vehicle-bubble-is-starting-to-deflate?embedded-checkout=true">15% in 2020</a>.Instead of laughing off the competition, Musk is now sounding the alarm on threats from Chinese automakers. On a conference call with investors in January, he said Chinese EVs would "pretty much demolish" other American carmakers if allowed to enter the US. America's biggest car companies have also started to recognize that they must figure out how to make electric cars cheap as soon as possible before China eats their lunch.While the likes of Tesla, GM, and Ford are rolling out a handful of high-priced luxury EV models, Chinese companies already offer a slew of options across a range of price points: starter EVs, beater EVs, ones for getting from point A to point B. And while the American automakers are still trying to win over consumers just in their own country, Beijing is already planning to work around trade barriers and get these cars sold around the world, including in the US."The thought that Chinese-quality engineering and design are not as high quality as the legacy carmakers — that should be put to bed," Tu Le, the founder of Sino Auto Insights, a consultancy focusing on the Chinese EV market, told me. "Right now, the legacies don't have competitive products. There's a vacuum. If China EV Inc. were allowed to enter the US today or next year, the legacies would be gutted."We are witnessing a shock to the global automotive order unseen since Japan barreled into the market in the 1970s. China's EV ascendance has sparked a fight that is forcing companies to stretch the limits of their technological capability and policymakers to reimagine the ideological underpinnings of decades of trade strategy. What's at stake is nothing less than a US industry worth $104 billion, about as much as <a target="_blank" href="https://www.trade.gov/country-commercial-guides/angola-market-overview">Angola</a>'s national GDP, and all the 3 million jobs that come with it."It's a global game. It has been a global game," Le said. "Motherfuckers just haven't been paying attention."It's safe to say EVs have moved beyond the "early adopter" phase of the technological life cycle and are now working to conquer mainstream car buyers in the US. In 2023, 1 million were sold in the country for the first time, up from 918,500 in 2022. Despite this growth, there have been flashing red signs that American automakers' strategy — making EVs that are just like combustion-engine cars but about $10,000 more expensive — isn't working. Projections for sales growth in the years ahead have come down, and consumers have expressed dissatisfaction with the crop of cars available. To overcome that, carmakers have realized they must lure customers with cheaper models. Earlier this month, Ford CEO Jim Farley said his company was "<a target="_blank" href="https://www.businessinsider.com/ford-tesla-model-2-elon-musk-jim-farley-electric-vehicles-2024-2">ruthlessly</a>" focused on developing a more affordable mass-market car. Tesla has been saying a cheaper car is on the way for years, without success (<a target="_blank" href="https://www.businessinsider.com/tesla-elon-musk-to-build-affordable-electric-car-report-2023-11">yet</a>).While US carmakers are still figuring out how to please a wide variety of customers, Chinese brands have EVs in about every form imaginable. Want a $10,000 car? Try the BYD Seagull. Want a luxury SUV that can float in water? That's the <a target="_blank" href="https://robbreport.com/motors/cars/byd-yangwang-u8-suv-waterproof-boat-mode-1235029369/">BYD U8 Premium Edition</a>. Want something more luxurious? Chery, another Chinese carmaker, launched a sexy EV sports car with scissor doors called the iCar, which costs between $21,800 and $58,000. China's ability to expand its suite of offerings comes down to cost. Of course, the US has higher labor costs, but China has also taken great pains to own the EV supply chain. Legacy carmakers are still searching around the world to source the raw materials and parts they need, a project the Chinese government has been working on for over a decade. In fact, many of these companies are selling their products to American firms: Tesla buys batteries <a target="_blank" href="https://www.cnn.com/2022/06/08/tech/byd-tesla-ev-batteries-intl-hnk/index.html">from BYD</a>, for example. That doesn't mean Chinese car companies aren't facing challenges. While the US's strategy (or lack thereof) has left us without enough chargers or the right kind of inventory, China has the opposite problem. It has too many EVs, too many EV makers, and a flagging domestic economy. China EV Inc. needs to expand to new markets. The future of the auto industry hangs on whether it can start to do that before the rest of the world can catch up.The year Musk tittered at the idea of Chinese EVs overtaking Tesla, the country produced only <a target="_blank" href="https://macropolo.org/analysis/china-electric-vehicle-ev-industry/#:~:text=In%20December%202019%2C%20the%20Chinese,overall%20vehicle%20sales%20by%202025">5,000 electric cars</a>. But Beijing's plan to dominate the global EV space was already well underway. The Chinese Communist Party started out by setting the goal of having EVs make up 25% of all cars sold in China by 2025 and showered money on companies with <a target="_blank" href="https://theicct.org/subsidy-fraud-leads-to-reforms-for-chinas-ev-market/">anything even resembling a plan</a> to contribute to that goal. At the same time, the government set about marshaling all the raw materials Chinese companies would need for EV batteries and drivetrains, creating a domestic ecosystem for suppliers. In this way, its industrial policy for EVs copied past plans to dominate <a target="_blank" href="https://gmk.center/en/posts/chinas-overcapacity-problem-returns/#:~:text=Throughout%20most%20of%202023%2C%20Chinese,excess%20steelmaking%20capacity%20in%20China.">steel</a> and <a target="_blank" href="https://prosperousamerica.org/is-china-overproducing-solar-again-iea-report-says-yes/#:~:text=China%20accounts%20for%20almost%2090,energy%20forecast%20report%20this%20month.">solar panels</a> — flood the market with supply until Chinese manufacturers were the only game in town.But in 2016, the CCP changed course. The grant money for EV research and development petered out, and the government announced that by 2027, it would phase out subsidies that lowered the price of electric cars for consumers. Beijing also instituted policies that opened the door for foreign carmakers to invest more in China's domestic industry and move manufacturing there. The result was pure carnage for China's domestic EV industry. Companies that depended on Beijing for subsidies <a target="_blank" href="https://techcrunch.com/2023/10/10/wm-motors-bankruptcy-highlights-challenges-faced-by-ev-startups-in-china/">began to implode</a>, and small players got pushed out of the market. But the chaos ended up strengthening the country's auto sector, ensuring that the most competitive carmakers gained market share. What emerged started to look more like a more mature industry — one with the capacity to manufacture world-class products. Last year, China became the <a target="_blank" href="https://www.wsj.com/world/china/china-vehicle-sales-rise-further-boosted-by-stimulus-policies-sales-promotions-3452cca1">world's largest auto exporter</a>.<div type="image" title="Chinese President Xi Jinping makes a toast after delivering his speech at a dinner marking the 74th anniversary of the founding of the People's Republic of China at the Great Hall of the People on September 28, 2023 in Beijing, China." height="3333" width="5000" msid="107986484" hostid="261"></div>None of this means the road ahead is any easier for the victors of Beijing's EV wars. Chinese automakers now have to deal with slower domestic demand as the Chinese economy enters a <a target="_blank" href="https://www.businessinsider.com/china-economy-shrinking-xi-jinping-debt-real-estate-american-world-2024-1">protracted phase of slower growth</a>. At the same time, they know that their growth and success are central to the vision of China's technological landscape that its leader, Xi Jinping, has. Slowing down is not an option. The sector is expected to add <a target="_blank" href="https://www.wsj.com/business/autos/china-electric-vehicle-demand-slowing-b4e78636">capacity for 5 million more cars</a> (most of them EVs) by 2025. Domestic sales are projected to reach only 3.7 million in that same period. Sales for standout startups such as <a target="_blank" href="https://www.scmp.com/business/china-business/article/3250622/chinese-ev-builders-li-auto-xpeng-and-nio-get-2024-slow-start-sharp-drop-january-sales">Nio, Li Auto, and XPeng</a> are already coming in lower than expected. BYD alone has built enough capacity to manufacture 4 million cars in China. In 2023, it sold <a target="_blank" href="https://www.google.com/search?q=how+many+cars+did+byd+sell+in+2023&amp;rlz=1C5GCEM_enUS1082US1094&amp;oq=how+many+cars+did+BYD+s&amp;gs_lcrp=EgZjaHJvbWUqBwgAEAAYgAQyBwgAEAAYgAQyBggBEEUYOTIHCAIQABiABDINCAMQABiGAxiABBiKBTINCAQQABiGAxiABBiKBagCALACAA&amp;sourceid=chrome&amp;ie=UTF-8">3 million</a> cars total.All these cars need somewhere to go, and for China EV Inc., the more profitable option is to move them west — first to Europe, where trade barriers are easier to overcome (for now), and eventually to the US. That is why brands such as BYD, Chery, and SAIC are all in discussions with the Mexican government to expand operations there. They need a toehold in North America to even begin conquering the US market. In the meantime, the US government is trying to spend an EV-parts ecosystem into existence, in part by handing out <a target="_blank" href="https://ir.novonixgroup.com/news-releases/news-release-details/novonix-finalizes-us100-million-grant-award-us-department-energy">grants</a> from the Energy Department to domestic companies working on battery technologies.No country wants to lose its automotive sector, so in Brussels and Washington, the rise of China's national champions has become a thorny topic between international-trade interlocutors. In public forums, Chinese trade apparatchiks have talked a good game <a target="_blank" href="https://www.ft.com/content/608c4b00-8efb-4322-9318-f6249096e3fe">about culling excess capacity</a> to assuage the fears of their counterparts. But at the same time, Beijing has put out an 18-point plan to counter trade restrictions and <a target="_blank" href="https://substack.com/redirect/3773ebf0-ac03-4983-8afd-9613e3ad9cbb?j=eyJ1IjoicDBuIn0.8PdnrzqVrhaSNasEauWg-AT6mGSX3AX-3rO2hxEVAZ8">push Chinese EVs out to the world</a>. None of this is really up for negotiation.To dominate the global market, Chinese automakers have to find ways to slip around the various barriers Western nations have put up. To crack Europe, BYD has announced plans to <a target="_blank" href="https://apnews.com/article/chinas-byd-building-electric-vehicle-plant-hungary-4c4754f43703d061e1dc02516be0c14a">build a factory</a> in Hungary. Cracking the US is more complex. It has more trade barrier protection from a China Auto Inc. onslaught, but it may not work forever.Take, for instance, America's taxes on Chinese EV imports. The Trump administration smacked a 25% tariff on Chinese EVs, bringing the total levy for their entrance to the US up to 27.5%. To avoid the tariffs, brands like BYD, Chery, and SAIC are all in discussions with the Mexican government to expand operations there."Most likely, the way Chinese companies would be able to participate in the US EV market would be by investing in the Mexican auto-parts sector," <a target="_blank" href="https://www.piie.com/experts/senior-research-staff/mary-e-lovely">Mary Lovely</a>, an economist and senior fellow at the Peterson Institute, told me.Parts that come from Mexico would be considered North American-made and subjected to lighter restrictions under the US-Mexico-Canada trade agreement. EVs fully built in China would also not be eligible for a $7,500 tax rebate for consumers created under President Joe Biden's Inflation Reduction Act. They would be eligible, though, if they were built in Mexico and met specific battery-sourcing requirements. For some stakeholders, the barriers aren't high enough. US consumers have shown that if the price is low enough, "Made in America" takes a backseat. That's why the United Auto Workers union is already so worried about Chinese cars that <a target="_blank" href="https://selectcommitteeontheccp.house.gov/sites/evo-subsites/selectcommitteeontheccp.house.gov/files/evo-media-document/11.7.2023-letter-to-ambassador-tai-auto-301.pdf">it has asked</a> the White House to raise tariffs even more. The <a target="_blank" href="https://www.wsj.com/economy/trade/biden-administration-explores-raising-tariffs-on-chinese-evs-e439d87d">Biden administration</a> has said it's seriously <a target="_blank" href="https://subscriber.politicopro.com/f/?id=0000018d-1903-dc2e-a3ad-79c31af10004">considering such a move</a>.This auto industry has become caught up in the existential question that is bedeviling societies all over the world — is globalization worth it? In this case: What do we care about more, preserving the auto industry or giving consumers a variety of cheap EVs to choose from?"We want to maintain an auto industry in the US — that's essential for jobs, national security, and for other sectors of the economy," Lovely said. "But then the question is how much protection do you need, recognizing that it's not a free lunch. This is why people don't like economists. We keep reminding people none of this is free."There is no telling how this will all shake out. Sure, Chinese EV makers are lean and mean, but they've never had to deal with international markets before. Beijing is used to dealing with foreign brands entering its market, not the other way around. For most of China's rise, it has operated in a cooperative world. Now it's operating in a world where its most important trading partners no longer trust Beijing. EVs collect so much data that policymakers have started to frame this debate as one not just about trade but also about national security. That's a harder debate for China to win.In the US, the race to counter China by building a cheaper EV is on. Tesla could pull ahead if delivers on its promise to get its $25,000 car out by 2025. But the company has a history of delayed product launches, an ongoing price war impairing cash flow, and an erratic, X-distracted CEO to deal with. Big Auto is contending with a more muscular United Auto Workers, more skittish shareholders, and management that has done nothing but fall behind. That said, America's legacy automakers have experience fighting for their survival and winning. Whatever happens, what is guaranteed is a transformation of the auto industry.<a target="_blank" rel="" href="https://www.businessinsider.com/author/linette-lopez">Linette Lopez</a> is a senior correspondent at Business Insider.

Elon Musk relied on China to fuel Tesla's rise. Now Beijing is turning on him.

<ul class="summary-list"><li><keyword id="11916714" type="UNKNOWN" weightage="60" keywordseo="copper" source="Orion">Copper</keyword> and <keyword id="11895967" type="UNKNOWN" weightage="60" keywordseo="iron-ore" source="Orion">iron ore</keyword> prices have been knocked down sharply in August after steadily running higher since early 2020. </li><li>Iron ore prices have lost nearly 30% on demand concerns and China's orders to curb <keyword id="11916715" type="UNKNOWN" weightage="60" keywordseo="steel" source="Orion">steel</keyword> production. </li><li>"Dr. Copper" as a barometer of economic health is being hurt while COVID cases ramp up. </li></ul>Copper and iron ore prices have been slammed this month by demand worries as the coronavirus crisis wears on, while iron ore faces industry-specific pressure as China demands curbs on steel production, prompting questions about whether prices for the industrial metals can return to highs for the year. Benchmark <a href="https://markets.businessinsider.com/commodities/iron-ore-price">iron ore prices</a> with 62% iron content in August have tumbled roughly 26% to trade above $156 per metric ton, driving to levels not seen since February. Copper has dropped more than 8% to fetch about $4.111 per pound, the lowest in about four months. The downward slope comes after prices for the metals had been climbing since March 2020 when they dropped alongside a crash in US stocks as the COVID-19 pandemic threatened to push economies worldwide into recession. "If you think about from the March 2020 S&amp;P 500 market low to the first half of this year, you saw copper just continue to go higher and that argument of strong metals like copper and strong <keyword id="11893875" type="UNKNOWN" weightage="100" keywordseo="markets" source="Orion">markets</keyword> made sense because higher copper prices imply <keyword id="11916717" type="UNKNOWN" weightage="60" keywordseo="economic-growth" source="Orion">economic growth</keyword> and economic activity and a need for copper," David Keller, chief market strategist at Stockcharts.com, told Insider. Iron ore like copper is an important industrial metal as it is a key raw material used to make steel. Production volume of about 2 billion tonnes and export volume of around 1.5 billion tonnes makes iron ore the third-largest commodity in terms of production volume after crude oil and coal, and the second-most traded commodity after crude oil, according to the World Steel Association.The rollout of COVID-19 vaccinations along with worldwide fiscal and monetary policy stimulus efforts have helped support the upswing in prices for the metals. But investors appear to be growing more cautious about the outlook for continued economic recovery as coronavirus cases increase on the back of the highly transmissible Delta variant.Meanwhile, the US Federal Reserve appears on the path this year <a href="https://www.businessinsider.com/tapering-federal-reserve-meeting-minutes-fomc-july-asset-purchases-timing-2021-8">toward reducing the emergency asset purchases</a> it put in place to help the economy weather the COVID crisis, a worrisome prospect for some investors who see the central bank's asset purchases as fostering economic recovery and stoking demand for industrial metals like copper as building projects restart or get underway. Supply constraints had also helped pull up copper prices this year. For iron ore, Bank of America this week said prices have peaked in part as supply has been catching up with demand. It noted that steel production in China had posted a run of seasonal highs since June 2020 largely because of a rebound after the start of the COVID pandemic. "That said, output growth has been slowing," driven by a confluence of factors, said BofA commodity strategists led by Michael Widmer. "Looking at demand first, growth has been grinding to a halt, as activity has become patchier, with construction and automotives particular headwinds."As well, the Chinese government has ordered steel mills to limit production in part to cut down on carbon emissions. It also changed tax incentives in May and July in an effort to better control steel production."This matters [as it] removes the incentive to run steel mills for exports," said the strategists. Moves that could revive iron ore prices include renewed stimulus measures in China and steel restocking ahead of the winter Olympics, which could prompt further mill closures to contain emissions, said BofA. Keller at Stockcharts.com said the price of copper this week tested the 200-day moving average of $4 per pound, the first such test since June 2020. "That whole idea of the infrastructure trade - industrials and machinery names -- is really coming off here. While I see that as a long-term play, certainly in the short term weakness in copper is agreeing that it's not an ideal time to make that bet," Keller said.

Copper and iron ore prices are collapsing on growth worries and Chinese steel curbs after soaring on hopes of a swift economic recovery

<ul class="summary-list"><li>China is facing a housing crisis, high youth unemployment, and declining consumer confidence.</li><li>But the US may not be heavily hurt by the slowdown.</li></ul>President Joe Biden called China's economy a "<a href="https://www.businessinsider.com/biden-china-economy-beijing-growth-ticking-time-bomb-us-trade-2023-8">ticking time bomb</a>," while Treasury Secretary Janet Yellen said China's slowdown could have "<a href="https://www.businessinsider.com/china-economy-deflation-janet-yellen-treasury-markets-spillover-recession-fed-2023-8">some spillovers to the United States</a>."However, William Lee, the Milken Institute's chief economist, told Insider <a href="https://www.businessinsider.com/china-economy-gdp-growth-recession-hurting-us-companies-workers-2023-8">China's economic stumble</a> might not be all bad for the US.His key argument is that China's plunging home sales and high youth unemployment stem from long-standing structural problems, not short-term consequences of <a href="https://www.businessinsider.com/china-economy-crash-inflation-deflation-trade-exports-growth-global-recession-2023-7">COVID-19 lockdowns</a>. This means that rather than riding out a cyclical downturn, some American companies are making major changes to pull out of China and move their supply chains elsewhere."American industries, because of the re-globalization and restructuring of global supply chains, are already pulling investments away from China toward other sources," Lee said.In addition, companies have been looking to diversify their supply chains and reduce risk, given geopolitical tensions surrounding the Russian invasion of Ukraine and trade restrictions on China.Other economists have agreed with Lee's view and even say China's falling prices could help slow US price inflation."A Chinese economic crisis might even have a small positive effect on the United States, because it would reduce demand for raw materials, especially oil, and as a result possibly reduce inflation," the economist Paul Krugman wrote in a <a href="https://www.nytimes.com/2023/08/21/opinion/columnists/china-financial-crisis-economy.html" target="_blank" rel="noopener">New York Times op-ed</a>.The US's insulation from Chinese turmoil is partially due to a fundamental shift in the US economy toward services and away from goods as the US tries to slow inflation, which remains above the Federal Reserve's 2% target. The services index remained higher than the manufacturing index as of August, suggesting Americans were spending more on things like dining out, haircuts, and entertainment than goods themselves.Amid rising tensions over trade, technological development, and China's relationship with Russia, US imports from China plummeted in the first half of 2023. Though China has been a leading producer in some goods such as electronics and electric vehicles, US goods imports from China — particularly in industrial equipment and consumer electronics — dropped 25% from January to June, according to the Commerce Department.In addition, the Federal Reserve, Bank of England, and European Central Bank are raising interest rates to fight inflation, which has resulted in companies tightening their wallets and buying fewer Chinese products."That to me is the most important reason why it is that Chinese exports have slowed down over the last year. That and the fact that most Americans are switching from buying Pelotons to going to Europe," Lee said.China's share of total US goods imports in the first six months have fallen progressively since peaking in 2017 as countries such as Vietnam, India, and Mexico have taken its place. Earlier this year, Mexico replaced China as the US's main trade partner as $263 billion worth of goods passed between the two countries in the first four months of 2023, <a href="https://www.dallasfed.org/research/economics/2023/0711?stream=business" target="_blank" rel="noopener">according to Luis Torres</a>, a senior business economist at the Federal Reserve Bank of Dallas.Direct investment in China and Hong Kong, as well as US portfolio investment, which includes stocks and bonds, were just 2% of the US GDP in the second quarter, which means the US has little exposure to China's economy and thus would not be significantly affected by a continuing slowdown.Meanwhile, Chinese imports of US goods, which may continue to slow, amounted to less than 1% of the US GDP, suggesting a reduction in Chinese imports wouldn't drastically harm the US economy."For foreign direct investment leaving the United States, when US investors go around the world, China is like No. 5, after the UK, Canada, and Mexico, so China has really been a destination for American capital, but it's not the biggest one," Lee said.This switch in supply chains will likely most help American steel companies, commodity producers, and battery manufacturers, Lee said, though he added that the American semiconductor industry might struggle more. In addition, China's slowing economy has <a href="https://www.businessinsider.com/china-economy-gdp-growth-recession-hurting-us-companies-workers-2023-8">already chipped away</a> at some American companies' revenues, including DuPont's and Danaher's. Though China's economy has been plagued by a number of crises, including low consumer confidence, many Americans may not have to worry about the downturn hurting their wallets.

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