Kalistani Major History

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Premier Jackson signals Continuation of Steel Policy
"Permanent and Structural Alteration of International Market is Goal"
Kaliburg, Ananto
May 4901


Premier Announces Continuation of Steel Policy at KalNaFerCo Annual Meeting

"Our goal in all of this," said Premier of the Republic George Jackson, "is to accomplish a permanent and structural alteration in the International Steel Market. The market has been hegemonically dominated by one producer for decades, and their independent manipulation of prices through scale production of finished steel tends to hurt smaller producers and forces them to serve the role of soaking up unmet demand, rather than competing for markets the way one big player can."

The Premier's first public statement on the Steel Crisis came at the Annual Meeting of KNF's Directors, which included major investors as well as Union Representatives and Workers who have guaranteed interest on the board. The response of the Nationalized Company's Directors was tepid. One of the Major Investors, who spoke with us following the keynote address even openly complained about the policy. "Yes, it is very bad for business," said Frank Marshall, who's Firm Republican Trust, holds a 3 percent interest in the Company. "We've seen millions of Rubles of stock value vaporize in this last year while the Premier uses our investments as a political weapon against Yingdala. That is not what our capital is supposed to be used for."

Marshall suggested that in January, when KNF stock bottomed out at around K1.23 a share, down from K65.26 just before the start of the crisis, institutional investors were prepared to dump their stock. "The stuff was junk paper," he said. "Luckily, as excess demand is soaked up and we don't have coils just filling up and filling up and filling up the warehouses now, the stock has started to recover a little bit, and I think that is the only thing that is keeping actors like me in the game."

It is true that much of the Steel that Kalistan has produced over the last couple years has gone through direct sales to private buyers whose governments don't have standing deals with either Yingdala or Kalistan. "The thing about the is," said Trade Minister Michelle Martinez, "Kalistan's pricing scheme has not altered Yingdalan behavior one bit, nor has it attracted big contracts, in anyway. Its like there is nobody out there at all, not just people not interested in the crisis, but at all... Radio Silent is what we are experiencing in regard to steel. So Direct Sales become the alternative." in fact since the crash last July in Steel Futures, nearly all volitility has gone completely out of the Futures Market, the price for futures has settled right around K685, for one, two and six month contracts, and has hovered around that point for months now. "The crash was caused by speculation," said Martinez, "and did not reflect any sort of reality, but soon it corrected to the 25-26% discount that we were aiming at and now people are simply transacting for steel as a matter of course, rather than treating the commodity as a speculative device."

The virtual elimination of the volitility in the futures market is butressed by the notion that anything that is not contracted for will be sold through direct sales at whatever the local spot is in Sulari. "We are still able to significantly discount Yingdalan sellers," said Martinez, "but the thing is, most of their steel is contracted, so, their direct sales are lower. And on the other hand, most of our contracts are going to local consumers, which means that the vast majority of our production is going out the door to whoever shows up for it. We've supplied a lot of consumers in Dovani, primarily, who are politically unwilling to work with Yingdala, but are not really interested in entering into long term agreements with the Republic either. The appreciate the discounts in Sulari at any rate."

How long these direct sales can continue, however, is unknown. "Ideally, we would like some longer term Contracts to come from out of Kalistan," said Martinez, "to sustain our production, but I have a feeling that within three years, the excess and unmet demand for Steel will be satisfied, and then we will have to make some changes. But our estimates vary widely with regard to what unmet need there is in the society. Some of the most conservative estimates are three years, but some of the more extravagant, and frankly incredible estimates stretch it out to ten or twelve years, at which time we will be firmly into a second round of sales, which suggests we can do this forever. The Government tends to accept the more conservative numbers, though, and so we are building policy to address that eventuality."

Earlier Currency controls which were established by the Bank to prevent a massive outflow of Rubles have only been marginally lifted. "The Finance Minister is working closely with the Bank," said Martinez, "to keep an eye on the Ruble abroad. The one effect that this crisis is having on the Republic is that the currency controls are limiting our ability to increase the convertibility of the Ruble. We can't increase confidence in our currency if we are limiting its acquisition overseas. But doing so is necessary to prevent monetary deflation, which would be more detrimental to the Republic long term than the continued lack of convertibility. Direct sales at Sulari help us with this and though the may offset the discount by a couple points, The Republican Bank has offered some what generous terms on exchange in Port Elga to acquire foreign currency while keeping Rubles locally."

With the recovery of the Futures market and modest gains of KNF in the Kalsie proper, it appears that Kalistan is settling in to the new reality, at least for itself. The Premier's speech therefore, seen in this light, might not have helped capitalists sleep any better at night, but it demonstrated that the Government remains firmly in control of a crisis which doesn't appear to have an end. And for smaller investors, that has encouraged them. KNF rose K.62 in late day trading, mostly on the strength of retail purchasing, and the Kalsie was up .27% on the day.