Big China steel thrives

Plunging iron ore prices are providing a lifeline for some of China’s biggest steel mills, but raising the prospect of a rising tide of exports and increased friction with the European Union and countries such as India.
Even as China’s domestic steel demand shrinks and the industry battles chronic overcapacity, lower iron ore prices have helped many large mills post better earnings in 2014 than a year earlier, supported by record exports.
That doesn’t bode well for struggling steelmakers elsewhere in the world, which have been hoping for a shake-out of the industry in China, the world’s top steel producer.
“(Cheaper ore) obviously encourages Chinese steelmakers to still produce because their costs are lower, and because of the overcapacity there’s a strong incentive to still export,” said Jeremy Platt, an analyst at London-based steel consultancy MEPS.