And Chinese steel mills have been forced to make purchases on the spot market.
To compound the offence, imports of Chinese steel were sharply up, whereas those from Japan fell.
Demand for iron ore is strongly correlated to Chinese steel production growth.
The past for Chinese steel is unclear, but the future is certain.
But the Organisation for Economic Co-operation and Development (a club of mainly rich countries) predicts that the growth in Chinese steel demand this year will be just 10.7%.
Chinese steel makers made meager profits in March, April and May and reported losses in the following months, only improving their performance in the fourth quarter of 2012.
Iron ore price negotiations continued between global miners and Chinese steelmakers, with various news reports suggesting that a new deadline has been set for this month, and that the Chinese steel mills may be making a concession on the deep price cuts they seek.
An Italian group has leased the biggest chrome mine, and a Turkish outfit has started processing scrap metal at an elderly Chinese-built steel plant.
Chinese prices of steel have risen by 20% since November, and the Baltic Dry Index, a measure of shipping rates and hence the demand for commodities, has more than doubled, although it is still 84% below its 2008 peak.
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Also, Chinese idle production of steel is greater than the production capacity of Japan and South Korea combined.
Influencing all of the price projection is the outlook for the Chinese economy and its steel industry which has all but stopped expanding.
Today DiMicco's worries center on low-priced steel from Chinese mills.
And Chinese stocks all through the steel industry, from iron ore to finished goods, which were built up in the expectation of a bigger stimulus package than has yet materialised, are now being run down, amplifying the downward price swing.
The worry on every steelman's mind is that as the growth in demand for steel slows from its recent hectic rates, the huge increase in Chinese production capacity will be diverted to turning out steel for export.
In 2004, Chinese mills rolled out 273m tonnes of steel, according to the International Iron and Steel Institute.
Huge Chinese demand and high freight prices are keeping foreign steel away from the U.S. And smart expansion strategy has solidified USS' position.
Among the efforts, Chinese officials ordered new buildings to use concrete reinforced with steel, while older buildings were to be retrofitted with reinforced concrete and masonry bricks.
However, the need for Chinese junks has decreased sharply as wooden vessels are replaced by steel-hulled ships, and today only three masters can claim full command of this technology.
The huge size of the Chinese industry now makes it a dominant force in both the global steel market and the market for production inputs such as iron ore and metallurgical coal.
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In the 1990s, when the "old-technology" steel industry in the U.S. was failing, Bain Capital helped build a new steel company, Steel Dynamics, which has grown into one of the largest steel producers in America today, holding its own against Chinese producers.
If things go well for U.S. Steel, the long equity position likely offsets whatever loss you would take on the CDS. U.S. Steel is far from immune to the price impact of Chinese demand, he says, and as a vertically integrated steelmaker it has exposure all along the process from iron ore to finished products.
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He bought them anyway, just in time to catch a Chinese-driven boom and a slew of acquisitions by foreign steelmakers like India's Mittal Steel.
Ryan Swift, editor of Asia-Pacific Boating magazine, says that Chinese yacht builders are a "mixed bag" but some, such as Kingship's steel and aluminum hulled vessels, are beginning to gain recognition.
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He bought them anyway, just in time to catch a Chinese-driven boom and a slew of acquisitions by foreign steelmakers like India's Mittal Steel (nyse: MT - news - people ).
But since the biggest Chinese steelmaker, Baosteel, had only a 6% share of its home market (Nippon Steel, by contrast, controlled a third of the Japanese market), it lacked the bargaining power for negotiations behind closed doors.
With no need to pay dividends (state firms do not have to make any transfers to central government) and little shareholder pressure to ensure that their investment is cost-effective, Chinese firms went on a capital-spending binge, concentrated in industries such as aluminium, steel, car production and cement.
Aditya Mittal, president and chief financial officer of his father's company, told a recent London conference (run by a consultancy, World Steel Dynamics, and Metal Bulletin) that one of the emerging majors would be bound to be Chinese, despite the extreme fragmentation of China's industry at the moment.
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