[EDITORIALS]A crisis for our producers

The short supply of raw materials caused by increase in demand from China has reached a serious stage. The prices of steel, coal, crude oil and cement have skyrocketed and these items are difficult to get even at premium prices.
The number of factories going idle due to the short supply of raw materials has increased and the construction of some apartment blocks is to be stopped because of a shortage of reinforcing bars and cement. Even traffic signs on the roads are being stolen for sale as scrap metal. Small and medium industries are suffering the most.
The raw materials crisis is another jolt to the already staggering Korean economy. Because of rising production costs, Korean industries suffer from funds shortages and decreased profits. A consumption recovery becomes more difficult, because consumer prices will rise because of the crisis. Korea’s exports will also be hurt. There is a sweeping effect on all economic fields ― prices, the economic cycle, investment and the trade balance. We fear that the Korean economy will be gripped by stagflation.
There were early warnings. Last year, when the international economy showed signs of recovery and China started to suck in raw materials like a black hole, some voices of alarm were raised. As a nation with few resources of its own, Korea should have paid more attention to the drain of raw materials. The government must strengthen its watch on the hoarding of raw materials. People who aim to make big money by exploiting the situation must be punished with high taxes. For small and medium industries that cannot cope with raw material scarcity, the government must take emergency measures, such as releasing government-held reserves and providing financing for the purchase of necessary raw materials.
The raw materials crisis will probably last for a prolonged period. The United States is considering limiting its exports of pig iron and other countries are busy preparing self-help measures. Korea should also develop a long-term fundamental measure that would protect us from the worst-case scenario.
The raw materials crisis is a challenge to the Korean economy. Economic recovery and job creation will only be possible when Korea overcomes this crisis.