The Military Army Blog


Steel’s Big Comeback Might Be Running Out of Steam Already

After eight years of misery, 2016 has been something of a boon for the steel industry. The big question is can they keep the winning run going? While many steelmakers surprised analysts with better profits and the stocks enjoyed the best rally in years, the industry s biggest problem hasn t been solved. China still exports at a record rate and there are hundreds of millions of tons of surplus capacity around the world still undercutting prices.

We don t think at this point that the recovery is sustainable, said Alon Olsha, an analyst at Macquarie Group Ltd. in London. There remains a huge amount of overcapacity in steel and latent capacity that can easily be turned back on. The biggest sign that the recovery in steel is almost over — prices have started to turn south and even ArcelorMittal recently warned that momentum is slowing. At the beginning of the year, steel prices rallied with the speculative fever in iron ore and signs that extra stimulus would spark a recovery in the Chinese economy. Prices peaked in late April, and have since weakened.

In July, China s steel exports jumped 5.8 percent year-on-year to 10.3 million tons. For comparison, the U.K. produces 12 million tons a year. China exported 67.4 million tons in the first seven months of the year, a record for the period. U.S. Steel Corp. is already moving to capture some of the benefits from its 192 percent surge this year and government efforts to stem a tide of cheap imports. The Pittsburgh-based producer said on Monday it was tapping shareholders for about $439 million to give it more financial flexibility. In July, the company reported a narrower loss than analysts expected.

ArcelorMittal reported its best quarterly profit since 2014 as deep cost cuts started to pay off and steel prices rebounded. The industry continues to face the challenges of structural overcapacity, Chief Executive Officer Lakshmi Mittal said in a statement last month. Thyssenkrupp AG, Germany s largest steelmaker, today reported[1] earnings that beat analyst estimates. Still, third-quarter profit fell 18 percent from a year earlier as Chinese exports continued to pressure the industry. The company doesn t expect higher steel prices.

Prices are currently rather flattening, Chief Financial Officer Guido Kerkhoff said in an interview with Bloomberg Television. Kloeckner & Co. SE, another Germany producer, said last week that it expects U.S. sheet-steel prices to fall by as much as 15 percent until year-end and doesn t expect a further steel price recovery in Europe in that period.

We expect market conditions to remain challenging in the second half of the year with uncertainties around prices and level of imports from Asia, Moody s Investor Service said in a report to investors last week. The second half should see mounting pressure on prices in all regions.

Before it’s here, it’s on the Bloomberg Terminal. LEARN MORE[2]


  1. ^ Thyssenkrupp Profit Falls as Chinese Steel Pressures Prices (1) (
  2. ^ LEARN MORE (

Mandelson Urges U.K. Nuclear Deal With ‘Prize’ Partner China

The U.K. s former European trade commissioner, Peter Mandelson, said Britain should deepen its economic ties with China after leaving the European Union, calling on Prime Minister Theresa May to approve a deal to build the country s first new nuclear plant in three decades using Chinese investment.

Out of the EU, we are probably more dependent on China s goodwill because we need to replace trade lost in Europe, Mandelson said Wednesday in a BBC Radio interview. We ll want to deepen our economic ties with China post-Brexit. It ll be a major foreign economic-policy priority for the country. I don t think that making any move in the meantime that makes that more difficult, and difficult enough it is going to be, is in Britain s interest. Chinese Ambassador Liu Xiaoming wrote[1] in Tuesday s Financial Times that the cancellation of the 18-billion pound ($24 billion) project at Hinkley Point in southwest England could affect commerce with Britain s second-largest trading partner outside Europe. May s administration last month delayed[2] giving the go-ahead for the plant, citing the need to consider carefully all the component parts of a deal that s been in the works for years. The postponement prompted speculation that May might have reservations[3] about Chinese involvement in a project that s being led by Electricite de France SA. China General Nuclear Power Corp. has a minority stake in the plant and has brokered a deal to be increasingly involved in two future U.K. nuclear projects, including the use of Chinese reactors at Bradwell. May s longtime adviser, Nick Timothy, warned last year that involvement by China in nuclear projects might allow it to shut down Britain s energy production at will.

Major Investments

The U.K. needs to show the world it is still committed to making major investments even after leaving the EU, Victor Gao, chairman of the China Energy Security Institute, said on BBC radio. My concern is that if the Hinkley transaction is not handled properly it may send the message to China and other parts of the world that Britain is not a reliable partner for major transactions. I hope Britain will eventually come out of this major hiccup shining as it did before.

Mandelson said China is a prized trading partner, and it wouldn t be in its economic interests to act irresponsibly in its U.K. nuclear investments because their whole future economic growth depends on them securing and sustaining contracts internationally like this one.

It would be commercially globally suicidal for China if they were to invest on the one hand and then try to mess around with other countries security the next; nobody would trust Chinese investment again: nobody would want to do business with China again, Mandelson said. To stretch this out beyond the end of September would be a mistake. We have an enormous amount to play for in the post-Brexit world.

Sign up[4] to receive the Brexit Bulletin, a daily briefing on the biggest news related to Britain’s departure from the EU.

Before it’s here, it’s on the Bloomberg Terminal. LEARN MORE[5]


  1. ^ China Warns U.K. That Relations Hang on Hinkley Point (2) (
  2. ^ U.K. Holds Up $24 Billion Nuclear Plan After EDF Approval (3) (
  3. ^ Is China s Role in Hinkley Point Really a Security Threat? (
  4. ^ Sign up (
  5. ^ LEARN MORE (

Bedfordshire company bids for contract to upgrade British Army …

14:06 Wednesday 10 August 2016

Bedfordshire company Lockheed Martin UK is to bid for the Ministry of Defence s contract to upgrade the British Army s Challenger 2 tanks. In collaboration with Elbit Systems UK, the Ampthill-based business will submit a proposal to undertake the Life Extension Project (LEP) that will see the main battle tanks in service until 2035. Lockheed Martin UK is a contractor for the Warrior Capability Sustainment Programme, which is upgrading a minimum of 380 armoured fighting vehicles for the Army.

The company is also designing and delivering 245 turrets for the AJAX vehicles that are being produced by General Dynamics UK. In June this year, a new 5.5 million manufacturing facility was opened at Lockheed Martin s Ampthill site in Bedfordshire where work on Warrior and AJAX will be undertaken. If successful, the facilities would also be used to deliver the Challenger 2 LEP, creating and safeguarding jobs at the site.

Richard Muir, business development director from Lockheed Martin UK, said: We have a proven track record of designing and delivering turrets for armoured fighting vehicles through the Warrior and AJAX programmes.

The ability to transfer knowledge between programmes ensures commonality and reduces risk.

We have invested millions of pounds in our facilities and have doubled our workforce of skilled engineers to develop our Ampthill site into a centre of excellence.

By teaming with Elbit Systems UK, and using our established and predominantly UK-based supply chain, we re confident we can offer an innovative solution to extend the life of Challenger 2 and deliver improved capability to the British Army from here in Bedfordshire.

1 2 3 109