Kalistani Major History

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Trade Minister Michelle Martinez says steel will hold steady
Production caps "adequate" to meet international demand
Kaliburg, Ananto
July 7, 4903


Michelle Martinez addresses Kalistani Economic Forum in Late June to Explain Steel Situation

The Minister of Trade and Industry, Michelle Martinez, who has been at the center of Kalistan's controversial Steel policy, which foreign critics have labeled "dumping" has put a lid on calls for expanding production further.

"As of this month," Martinez told a group of leading Republican Economists at the Kalistani Economic Forum late last month, "Kalistani production is sitting at about 80 percent of its total capacity. This not only takes into account the ore extraction operations in Neveras and Vrassa, but our ability to produce to meet demand and to fill our contracts. The government of Kalistan has determined, and I think with sound economic science, that this level of production is adequate to meet current world demand, and to keep our dockworkers and longshoremen working full time to service incoming ships. If we expand production any further, we will need to start sacrificing things like maintenance to keep the factories working, and we could further dislocate the Kalistani Ruble, just as the Finance Minister is thinking of removing caps on its movement overseas."

The Trade Minister noted new deals with Hutori and Dolgava as signs of international interest in Kalistani steel, as well as new interest from countries like Zardugal and Lodamun to soak up the remaining slack in the Steel Production Schedule. "Deliveries to both Hutori and Dolgava are on track," said Martinez, "But additional export capacity itself will depend upon our completion of the expansion at Swedes, unless we are working our shippers overtime in Sulari, which is something that Management at the port is reluctant to do, simply because it will lead to injuries, and unsafe procedures which could hurt our guys or their shipments." The Trade Minister described the process of steel, from extraction to processing and finishing to shipping and loading and then delivery as an intricate ballet, where each part must do its part and do it well, or the entire system breaks down.

"Honestly, we are not sure how major economies in the world do it," said Martinez, "but then again, they also do not possess vertical monopolies in their country the way Kalistan does. We can plan and organize this whole process, and fit a component in here or there as we need to, allowing us the Just In Time supplying that larger scale economies possess, but do it all in house. But it all has to work together. An increase of production much further, when the system is currently operating in an optimized environment, will put additional stresses on the system."

As the steel surplus is soaked up by regular purchasers and direct sales at Sulari more or less come to an end, KNF steel has approached the guaranteed 10 percent discount that the Trade Minister established at the beginning of the crisis, ensuring that Kalistani Steel will still underbid Yingdala. "The Republic has had to take extraordinary efforts to keep KNF 6 month futures below the K840 price point recently," said Martinez, "and part of this includes the Finance Minister dropping more subsidies on KNF to offset some of the costs, especially with regard to transportation. But we think we have found a sweet spot that will allow our steel prices to not inflate beyond our 10 percent discount, and ensure we are still underbidding Yingdala."

The Trade Minister's Keynote received a tepid response from the mostly liberal group of economists attending the Economic Forum. "Of course, it's all apology for mercantilism," said Dr. Bradley Compton, professor of economics at Vrassa District University. "The Socialist Party of Kalistan, in their years and years in power, have still not learned even a modicum of micro economic orthodoxy which describes prices set by the iron hand of the Market, and I am not sure why we were expecting this Trade Minister to suggest anything else."

Other economists were more reluctant to critique the steel policy, and instead critiqued the Trade policy of the Republic more generally. "The Socialist Party supposedly wants zero growth," said Socialist economist Dr. Dava Cadbury. "But dramatically increasing Steel production beyond the needs of the Republic in order to undermine Yingdala's market share and then having to scramble for buyers to prevent the market from completely collapsing is a bit short sighted. That is what capitalist nations do and it could have been a very costly gamble if it did not pay off. Luckily for Kalistan, it eventually did, but we had to once more sacrifice convertibility of the Ruble to do so."

Other economists were concerned with how long the Republic could keep up such high levels of production. "We cannot be sure how long the high quality ore in the Range will last, before we are starting to have to pay more to produce the same amount of steel," said geologist Dr. Michelle Roberts. "There appears to be decades of the high quality ore up there, but with responsible usage, it could serve the Republic for centuries, and without additional proven sources, we could very quickly run into a wall on iron production at this rate. It's really unknown."

The Trade Minister did signal a possible solution to the crisis. "Once more, if Indrala was interested in reaching out to us," said Martinez, "we could make some arrangement on prices that lets both Yingdala and Kalistan participate in supplying the world steel market profitably. We have heard nothing from Indrala though, and we are still standing by to work out a mutually beneficial arrangement. Meanwhile, we'll keep making the steel and selling it." A pricing arrangement with Yingdala could help ease pressures on demand for Republican Steel, but as the crisis continues, and Yingdala's export market continues to suffer damage, it is possible that an accord will be harder to reach with each passing day.