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The QE3 give “Interpretation of the steel industry”

14 am Beijing time, the U.S. Federal
Reserve Board announced the implementation of a third round of quantitative
easing (Quantitative Easing QE3), attracted worldwide attention. For a time,
many public opinion or analysis immediately seize “QE3” give
“steel industry Interpretation”, it seems introduction of “QE3”,
the current steel prices in China is expected to rise or rebound. This is a bit
too far-fetched.

Domestic steel market doldrums for nearly a
year, a Federal Reserve’s “QE3” can activate it? Even if we are dragged
too tired, too helpless by steel industry, we should not directly and tightly
associate the aim of lowing America’s long-term interest, family cost, corporate
financing cost and the ‘QES’ designed to ease labor market’s pressure with current reliance on
domestic consumption of China Steel industry, do not have to exaggerate
the effect on steel prices in China.

We say that the main reason for China steel
gridlock is because of domestic and international economic growth has slowed
down lead to steel consumption significantly reduced, the steel industry in the
long-term development of structural contradictions accumulated highlights, steel
industry long-term downturn resulting in a serious shortage of market
confidence. The relationship between characteristics and contradictions of
China Steel industry and the Federal Reserve’s “QE3” is relatively
“distant” and “indirect”.

From the view of the global economic
integration, the U.S. QE3 “printing money” or will enable China facing
inflation risk. U.S. launching QE3 would necessarily lead to commodity prices rise.
Since China is a major importer of commodities, rising commodity prices certainly
will lead to rising prices in China. In fact, after the release of “QE3”,
the most important and the most direct impact is the U.S. stock market,
commodity markets and precious metals market. However, it is hard to say what
kind of assistance QE3 can offer for the real economy, the role will be both
positive and negative, consolidated result may be negative.

Furthermore, the United States launched the
“QE3” certainly has a negative impact on the lives of the Chinese
people. Since China is a major importer of commodities, rising commodity prices
certainly will lead to rising prices in China. In 2011, China’s crude oil
imports close to 200 billion U.S. dollars, if crude oil prices rose 10% in the
next six months, then it means that China at least to spend about $ 10 billion
of financial resources to import crude oil. China’s retail gasoline prices are
now back to “8” era, if jumped 10% again may want to enter
“9” era. Then the new round of price increase is inevitable.

 

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