With thunderous roars and flashes of blue light, an electric arc furnace at a steel mill in this industrial city melts 170 tons of scrap metal at a time, which is made into reinforcing bars for construction projects across Britain.
The furnace, decked out with all the latest gear, helps keep costs down by relying on local scrap instead of imported materials. It was part of a broad $500 million investment plan to make the steel mill competitive and profitable.
But China has stymied the strategy.
The steel mill, owned by the privately held Celsa Group of Spain, just cannot compete with Chinese rivals, which offered products at 20 percent below prevailing rates in Britain. Celsa estimates that Chinese companies at one point accounted for about half of the region’s sales in a certain type of reinforcing bar, up from essentially nothing just four years ago.
“It’s nice to have free trade, but it has to be fair,” said Luis Sanz, the managing director for British operations at Celsa.
The steel industry sits at the crux of a major debate playing out across the world economy, one that could soon be intensified by a looming change in the global trade rules.
As China’s economy has slowed, the country’s manufacturers, in varied areas like solar panels, tires, aluminum and shoes, have been in a desperate hunt to maintain sales and avoid layoffs. Looking beyond their borders, many are offering rock-bottom prices to win orders.
The heavy discounting has fed a backlash. Politicians like the American presidential candidates Donald J. Trump and Bernie Sanders are railing against free trade, saying the rules hurt domestic workers. Countries are crying foul, claiming that Chinese exporters are dumping goods.
And the dynamics are getting more complicated, as a crucial provision of global trade rules expires in December.
Source: Nytimes.com