General Steel Holdings, which I have written about a couple times, keeps getting beaten up. The shares are falling again today (OK, almost everything’s falling today, but GSI is falling pretty hard, down almost 8% at one point a few minutes ago).
Why? Well, other than the general ugliness over small cap Chinese stocks and the fact that, as an acquirer, GSI took a hit when they offered to buy yet another company, this one might be related to the US-China dispute over steel at the WTO — the Financial Times had a decent article explaining it earlier this week.
The dispute is over taxes and export quotas, which the US is arguing are helping to deflate domestic Chinese steel prices while they inflate prices for the rest of the world. I don’t know what will happen with this, but since General Steel is a domestic producer, not an exporter in any signficant way, I’m not too worried. This seems like it will probably have a much greater impact on the big state-owned producers in China that rely on high volume and low costs, I expect any fallout from the WTO — and it’s too early to tell if there really will be any — would have less impact on General Steel as they produce specialized products for domestic customers. We’ll see, it’s been a crazy ride over the last month and that could well continue.
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