### Summary
US Steel Corp., once the most valuable company in the world, is now the subject of a bidding war among rivals offering a fraction of its former worth, highlighting the decline of the manufacturing sector in the US.
### Facts
🛢️ US Steel was formed in 1901 and became the world's first company valued at more than $1 billion, but now faces the possibility of being bought for less than $9 billion.
💪 The company played a critical role in the US's rise to global economic superpower status by providing steel for various applications.
⬇️ US Steel has fallen behind other American steel companies in output and market value, and the US steel industry as a whole is no longer among the top 10 steel producers globally.
🏭 New technologies used by upstart competitors, both foreign and domestic, have contributed to US Steel's decline. Importantly, the company was slow to adapt to mini-mills and electric arc furnaces.
📉 By 1991, US Steel was removed from the Dow Jones Industrial Average, indicating the nation's shift away from manufacturing.
✋ The decline of American manufacturing jobs has become an issue in the 2024 presidential election, with President Joe Biden aiming to revive the sector.
📉 Other once iconic steel companies, such as Bethlehem Steel, Inland Steel, and LTV Steel, went bankrupt or had their assets sold or closed in recent decades.
💼 Rivals, including Cleveland-Cliffs and Esmark, are interested in purchasing US Steel, but it remains uncertain if regulatory approval would be granted due to antitrust concerns.
🇺🇸 Political figures, like US Sen. J.D. Vance, have voiced concerns about foreign steelmakers buying US Steel, calling it of "strategic national importance."
❌ US Steel has not yet commented on the acquisition offers or interest from rival companies, but the potential for the iconic company to disappear is greater than ever.
### Summary
Oil prices rose in Asian trade, unfazed by China's disappointing interest rate cut, as the prospect of tighter supplies supported the outlook.
### Facts
- 💰 Oil prices rose in Asian trade, shrugging off China's interest rate cut.
- 🛢️ Concerns over slowing demand in China and rising US interest rates had driven steep losses in crude prices.
- 📉 China cut its one-year loan prime rate by 10 basis points to 3.45%, disappointing market forecasts for a larger cut.
- 🏢 Lack of changes in the mortgage rate raised concerns over a worsening real estate crisis in China.
- 🌍 Deep production cuts from Saudi Arabia and Russia are expected to limit crude supplies by nearly 70 million barrels over 45 days.
- 🇺🇸 Robust fuel consumption in the US, particularly during the summer season, pointed to tighter markets.
- 📈 Analysts expect oil prices to remain relatively higher for the rest of the year, despite the prospect of higher interest rates affecting US demand.
China's stuttering economy poses a major threat to global commodities demand, as economic activity and credit flows deteriorate, and structural challenges and weaknesses in various sectors, including base metals, iron & steel, crude oil, coal & gas, and pork, affect the market.
China's economic slowdown is worrisome for global markets as it is one of the largest buyers of commodities.
Despite U.S. trade shifting away from China, the country still relies on China-linked supply chains, leading to higher costs for consumers and uncertain benefits in terms of improved manufacturing efficiency, according to research presented at a Federal Reserve symposium.
US imports of consumer goods, particularly home electronics, experienced a significant decline in the second quarter of 2023, following the end of the Covid-induced work-from-home electronics boom, while US manufacturing also slowed, indicating challenges in stimulating demand; however, claims that this decline in imports is solely due to re-shoring are false, as imports from US allies such as Mexico, Vietnam, and India have increased in tandem with China's declining exports to the US.
China's economy is facing multiple challenges, including tech and economic sanctions from the US, structural problems, and a decline in exports, hindering its goal of becoming a top global exporter and tech power, which could have long-lasting effects on its status in international relations and the global economy.
China's commodities sector, including coal mining and metals production, is experiencing declining profits due to the worsening property crisis and economic slowdown, with steel producers being the hardest hit. However, there is potential for growth in metals firms linked to the energy transition, particularly in China's green copper consumption driven by electric vehicles and renewable power.
A potential economic downturn in China may have implications for other countries, but the impact on the United States is expected to be minor due to limited exposure to China's economy.
Concerns arise that the struggling Chinese economy and volatility in the stock market may negatively impact Bitcoin's price and hinder its role as an alternative store of value in the face of a strengthening U.S. dollar.
The yen's weakness against major currencies is driving up import costs in Japan, leading to higher prices for necessities like energy and food.
Despite the turmoil in China's real estate market, iron ore prices have remained high, suggesting that demand for construction and manufacturing materials is still strong and indicating that China's economy may not be as bleak as other data suggests.
Chinese companies have increased their presence in cutting-edge materials and electric vehicles, making it challenging for other countries to reduce their dependence on Chinese supply chains, despite protectionist measures.
India is closely monitoring steel imports from China, which reached a five-year high in the first four months of this fiscal year, amid concerns of potential dumping by Chinese sellers and a fall in domestic steel prices due to surplus sales in the local market.
China's economic slowdown, driven by a debt-ridden and overbuilt property sector, is not expected to have a significant impact on the global economy or US exports, although a prolonged downturn could have broader consequences. While companies like elevator maker Otis will feel the effects, China's reduced growth is unlikely to be contagious beyond its borders.
China's share of US goods imports has dropped to its lowest level since 2006, as American companies reorganize supply chains to reduce dependence on China and shift to countries like Mexico and Vietnam.
China's imports and exports experienced a monthly decline in August, with exports falling by 8.8% and imports falling by 7.3%, indicating ongoing challenges despite some slight improvement.
China's total import and export value in the first 8 months of this year slightly decreased by 0.1 percent compared to the previous year, but exports have continued to grow and the global market share remains stable, highlighting the overall stability of China's foreign trade operations.
India has imposed an anti-dumping duty on certain Chinese steel for five years due to concerns over potential dumping by Chinese sellers.
India's steel producers anticipate a rise in local manufacturing and a decrease in prices after the government's imposition of an anti-dumping duty on steel wheels from China, leading to increased competition and lower domestic prices.
Big Japanese manufacturers and the services sector in Japan are experiencing a decline in confidence, with concerns of a slowdown in China's economy affecting global and domestic growth, according to a Reuters poll. The weak sentiment in the business sector raises doubts about the ability of exports to drive economic recovery amid weak domestic demand. Many companies cited high input costs and weak demand as contributing factors, along with geopolitical risks and tensions between the US and China.
China's macroeconomic challenges, including deflationary pressures, yuan depreciation, and a struggling property sector, could have broader implications beyond its borders, impacting global metal exporters, trade deals, and global inflation; however, investing in China's stocks may offer compelling valuations despite the current downturn.
China's struggling economy, including its deflation and property crisis, will have a significant impact on the US due to its high foreign investment exposure in China and the dependence of key exporting countries like Chile, Australia, and Peru on the Chinese market.
The spot price of iron ore has reached a five-month high in China due to improving sentiment and supportive fundamentals, but the rally may be limited by potential government measures to restrict steel production and officials' dissatisfaction with rising prices.
China is urged to alter its trade and investment approach in Mexico due to the country's new tariffs on imports, which are creating uncertainties and affecting China's exports and investment in Mexico.
The return of Australian barley imports to China is expected to lower costs for craft beer brewers and bring happiness to the industry, after heavy anti-dumping tariffs were imposed in 2020.
The process of derisking supply chains from China, as the U.S. seeks to reduce its dependence, introduces new risks that must be identified, evaluated, mitigated, and responded to by American firms.
China's demand for major commodities such as copper, iron ore, and oil is exceeding expectations due to growth in the green economy and manufacturing sector, according to Goldman Sachs.
China's decreased oil demand, coupled with its shift from crude imports to refined product exports and sizable oil inventories, is countering recent crude price surges and playing a significant role in the global oil market.
The World Trade Organization has revised its forecast for global trade growth, halving its estimate due to rising interest rates and various economic challenges, with a particular impact on iron, steel, office equipment, textiles, and clothing. The slowdown in trade has raised concerns about the potential negative impact on living standards worldwide, particularly in poor countries.
The U.S. steel industry is being negatively impacted by the United Auto Workers' strike against Detroit's automakers, causing a decline in steel demand and a significant drop in prices.
American firms are increasingly bringing manufacturing operations back to the US, with mentions of nearshoring and reshoring growing by 216% year over year since 2022; this trend has been accelerated by the trade war with China and the pandemic's disruption to the global supply chain, leading to a boom in construction and manufacturing projects in the US.
The trend of moving manufacturing back or closer to the US, known as nearshoring, reshoring, or onshoring, has been growing significantly since the start of 2022, with mentions of these terms by American firms increasing by 216% year over year; this trend has been fueled by factors including the trade war with China, the pandemic's impact on global supply chains, advances in automation, and rising freight costs.
