Unfortunately for China's recyclers, the economics teaching that says demand strongly influences output could not be more evident. Demand is not meeting supply because of the demise of China's steel industry. So John Maynard Keynes would not be surprised that its shipbreakers are forced to stockpile the steel remnants of China's merchant fleet. Demand for second-hand scrap metal is seriously decreasing in a weak market, which is evident from current scrap prices. Prices in China are about $300/ldt for dry and $315 for wet, down by about $50/ldt from a year ago, when the market was bullish. The supply boom was exacerbated by Beijing's hefty financial subsidies for shipowners to scrap old ships domestically.
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