This week’s sector and stock focus

When it comes to steel, China is king, producing more than 1 billion tons a year, which is well over half the world’s output. However, a domestic construction slump means there’s too much steel and too little demand. For the rest of the world, the fear is that it will become more of a dumping ground for excess product, cutting prices, driving plants out of business and putting workers out of jobs. The extent of the challenge was laid out starkly this week in Bloomberg, quoting Hu Wangming, the boss of China Baowu Steel Group Corp., who oversees an empire of blast furnaces — the towering smoke stacks that have underpinned global industrialization for two centuries — churning out 130 million tons of steel every year. That’s more than the US, Germany and France combined. The Shanxi Jianbang Group also highlighted the crisis in recent days. The steel industry needs to cut more than 30% of enterprises to get out of the current difficulty, said General Manager Zhang Rui on Aug. 15, according to a statement on its WeChat channel. Hot rolled coil — a benchmark product — is shipping from China at its cheapest since 2020. Global prices, which typically lag China by 2-3 months, are also at multiyear lows.