Steel Market in China Impacted by Pollution Regulations
New regulations imposed to reduce the impact of pollution caused by the steel industry have resulted in the lowest prices for steel in 20 years. Due to these new guideline, Chinese steel makers – including top producers – have drastically cut the level of production and some have even shut their factory doors completely.
The reduction of steel production is a direct response to the amount of smog these companies are producing as well as most having an inventory that is overcapacity. The effects on the environment are easily seen throughout the country, and having too much product is greatly decreasing the price of steel throughout the industry leading to more and more debt being acquired. Now companies are being forced to undergo renovations in order to meet stricter guidelines to reduce pollution throughout the country.
Fortunately while companies are cleaning up pollution and reducing their inventory most are still able to cover their production costs, leading to no money being lost – but none being made either. And with so many steel production companies forced to make drastic cutbacks, it has led to an extremely low steel price per ton.