Soft underbelly in China's steel sector boom points to bumpier economic recovery www.reuters.com

MANILA/BEIJING (Reuters) - Behind the boom in China’s steel production since March - and hopes for a quick economic recovery - is a tale of two diverging sectors: construction demand for infrastructure projects has been strong, while manufacturing has been slower to bounce back.

That highlights the challenge facing policymakers as Beijing and local governments can control the pace of spending on projects like roads, rails and reservoirs, but have very limited options to support exports or domestic demand for machinery and appliances.

The soft underbelly in China’s steel revival following the coronavirus outbreak is about to be thrown into stark relief by a seasonal downturn at building sites, analysts say, and points to a more protracted recovery for the world’s second-largest economy from a once-in-a-century pandemic.

“There is only so much China’s steel industry can do while the rest of the world struggles,” said Daniel Hynes, senior commodity strategist at ANZ.

CRITICAL COG
China’s mammoth steel sector has long been a central pillar of its industrial powerhouse, employing hundreds of thousands of workers who churn out vital raw materials for industry and support scores of ancillary logistics and processing businesses.

The economy shrank 6.8% in the first quarter, the first contraction in decades, hit by the new coronavirus which emerged in China late last year.

The surge in steel output to all-time highs in May raised hopes that the heart of the economic engine is recovering well, and may help resuscitate growth at home and globally.

Yet amid the recent sector-wide bustle has been a lopsided reliance on metal demand from construction sites that has partially masked weakness from manufacturers and calls into question the robustness of the steel boom as well as how quickly China can restore growth.

“The market appears to be relying too heavily on expected infrastructure stimulus in China to boost demand,” ANZ’s Hynes said.

REBAR RELIANCE
Demand for the main steel products used in construction - rebar and wire rod - has accounted for an average over 53% of total steel demand since late March, according to calculations based on figures from data-tracking firm Mysteel.

That compares to an average of 47.5% for all of 2019, and 51% for the same period in 2019.

At the same time, demand for the main steel products used by manufacturers - hot-rolled coil (HRC) and cold-rolled coil (CRC) - has been well below normal, averaging 35% of total demand since late March compared to 40.4% on average in 2019.

Stocks of rebar have also fallen faster than other steel products, dropping by 51% since peaking in mid-March.

Given the extent of lockdowns in many of China’s trading partners, sluggish factory demand is not too surprising and could persist for many more months.

Yet the surge in overall steel production - driven by a 59% jump in rebar and 40% rise in wire rod output since mid-March - suggests the sector is at risk of over-supplying the market just as demand is expected to take a hit from rained-out work sites, especially across the South.

The monsoon season, which runs through August, arrived 10 days earlier than normal in southern China this year, causing widespread floods that have already stopped work at some sites.

“We are now about to enter the traditional slack season for steel consumption,” said Richard Lu, senior analyst at consultancy CRU in Beijing. “It will largely depend on the weather, and we should see some decline at least starting from July, if not late June.”

While construction materials are losing demand momentum, flat steel use has been plagued by the global economic contraction and that has kept China’s factories underpowered.

Sales of steel-heavy items like autos and machines have fallen this year, with China’s auto exports dropping 16.9% in the first five months, and home appliance exports - worth $77.8 billion in 2019 - down 9.1%.

Direct metal exports have also dropped.

To offset lower global demand China’s policymakers have unveiled stimulus measures aimed at reviving consumption and supporting large infrastructure projects including key industries.

However, the uneven steel demand shows the limits of Beijing’s stimulus, which comes with its own risks, and points to a bumpy economic recovery.

“The Chinese government does not want to spend a lot on stimulating the economy because that also means having to pile up debts,” said Iris Pang, ING chief economist for Greater China.

Reporting by Min Zhang, Sophie Yu and Tom Daly in Beijing, Enrico Dela Cruz in Manila and Mai Nguyen in Singapore; Editing by Gavin Maguire & Shri Navaratnam

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Facebook removes Trump ad over 'Nazi hate symbol' www.bbc.com

Facebook says it has removed adverts for US President Donald Trump's re-election campaign that featured a symbol used in Nazi Germany.

The company said the offending ad contained an inverted red triangle similar to that used by the Nazis to label opponents such as communists.

Mr Trump's campaign team said they were aimed at the far-left activist group antifa, which it said uses the symbol.

Facebook said the ads violated its policy against organised hate.

"We don't allow symbols that represent hateful organisations or hateful ideologies unless they are put up with context or condemnation," the social network's head of security policy, Nathaniel Gleicher, said on Thursday.

He added: "That's what we saw in this case with this ad, and anywhere that that symbol is used we would take the same actions."

The ads, which were posted on the site on pages belonging to President Trump and Vice-President Mike Pence, were online for about 24 hours and had received hundreds of thousands of views before they were taken down.

"The inverted red triangle is a symbol used by antifa, so it was included in an ad about antifa," Tim Murtaugh, a spokesman for the Trump campaign, said in a statement.

"We would note that Facebook still has an inverted red triangle emoji in use, which looks exactly the same," he added.

Mr Trump has recently accused antifa of starting riots at street protests across the US over the death in police custody of African American George Floyd.

Who are Boogaloo Bois, antifa and Proud Boys?
The president said last month that he would designate the anti-fascist group a "domestic terrorist organisation", although legal experts have questioned his authority to do so.

Antifa is a far left protest movement that opposes neo-Nazis, fascism, white supremacists and racism. It is considered to be a loosely organised group of activists with no leaders.

Most members decry what they see as the nationalistic, anti-immigration and anti-Muslim policies of Mr Trump.

A move likely to infuriate the president
By James Clayton, Technology Reporter, BBC North America

This is the latest salvo in an increasingly fraught relationship between the technology giants and the White House.

Last month, Twitter put a warning on one of the president's tweets about rioting in Minneapolis - saying it had "glorified violence".

Mr Trump hit back by talking about the "unchecked power" of big tech. He said that Section 230 - a law that protects social media companies from being legally responsible for the online content of users - should be revoked.

But forget Twitter for now, Facebook is the platform that Mr Trump really cares about. The social network is where a majority of his online political advertising budget goes. The move will likely infuriate the president. It also acts as a warning that Facebook does - and will - moderate some political content.

As the 2020 election draws nearer, it's likely more and more focus will be placed on what it does - and does not - take down.

Earlier this month, Facebook employees spoke out against the tech giant's decision not to remove or flag a controversial post by Mr Trump relating to the protests over Mr Floyd's death.

The president posted a comment on the social network saying that he would "send in the National Guard" and warned that "when the looting starts, the shooting starts". But Facebook said it did not violate its company policy.

Mr Trump had tweeted the same comments, but Twitter placed a warning over the content, which it said "glorified violence".

Some Facebook staff said they were "ashamed".

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