China's Currency Manipulation a Thorn in Obama's Side; U.S. Fiscal Liberal Policies will cause a Labor Revolution in China as Dollar Implodes by 2012

LONDON (Dow Jones)--Global crude steel production dropped 16% on the year but rose 4.1% on the month in June to 99.8 million metric tons, as production reached a record monthly high in China, figures released by the World Steel Association showed Monday. The World Steel Association, whose members produce around 85% of the world's steel, said although production was still weak on an annual basis, "the pace of contraction showed a slow down in June" for almost all 66 countries that contributed to the report. China, the world's largest steel producing nation, increased crude steel production 6.4% on month and 6% on year to a record monthly high of 49.4 million metric tons in June. Excluding China, world crude steel production rose 1.9% on month and fell 30.2% on year as the economic downturn continued to take a bite out of demand. "We believe higher [Chinese steel] production in June is due to stronger domestic demand as a result of the country's steel-intensive stimulus plan which has led to higher steel prices in the country," analyst Michelle Applebaum of Steel Market Intelligence said in a report. But "we remain concerned that higher steel production levels combined with recently increased export tax rebate incentives will lead to still higher tonnage of Chinese steel entering the global market creating the potential for pressure on world markets," she said, noting Chinese steel exports rose 7% in June. Metal analyst Jim Lennon of Macquarie Bank said the surge in production has created a major squeeze in raw materials supply, pushing spot iron ore prices 10% above the recently negotiated annual prices agreed between suppliers and steelmakers outside China. Iron ore miners and large steelmakers around the world are starting to increase production and prices due to signs customers are placing more orders to plug gaps in inventories and in response to greater infrastructure spending stemming from government stimulus packages. But steelmakers such as ArcelorMittal (MT) have warned although demand may be technically rebounding, it isn't set to reach the record highs seen in previous years for a while longer. On a monthly basis, steel production in the European Union rose 3.5% on month to 11.2 million tons, driven by near 14% increase in Germany and an 11.5% increase in France, which more than offset declines in Spain and Italy. Production in the Commonwealth of Independent States increased 2% on month to 7.8 million tons, driven by higher output from Russian mills which offset lower output from Ukrainian mills. In the Americas, U.S. production rose 3.2% and Brazilian steel production increased 2.5%. The picture was mixed in Asia, where Japanese production rose 6.4% but South Korean output fell 5.9% during the same period. Indian production also fell 3.2% on the month in June but rose 5.7% on the year. -By Alex MacDonald, Dow Jones Newswires; +44 (0)20 7842 9328; alex.macdonald@dowjones.com Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=g%2B1%2BpHcN3Yqp7egIqKE5TQ%3D%3D. You can use this link on the day this article is published and the following day. (END) Dow Jones Newswires July 20, 2009 10:30 ET (14:30 GMT) Copyright (c) 2009 Dow Jones & Company, Inc.- - 10 30 AM EDT 07-20-09