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The Price of China’s New Green Credentials

China has in the recent past been notorious for its levels of air pollution.  This was highlighted during the Bejing Olympics where special measures were taken to reduce pollution as world attention was focused on the Chinese capital.    Since then the government has taken considerable steps to reduce pollution and clean up the air. The government and in particular it’s leader Xi Jinping are to be congratulated for the huge changes they have achieved.

However there are no free lunches and it has come at a price.  The biggest pollutants in China are coal fired power stations and steel production.  Measures have been taken in both these areas but its the steel area which has had the biggest effect on global markets.  China produces half the worlds steel so anything that alters the Chinese market affects the world market.    The Chinese government hare introduced strict pollution controls on steel factories.  In order to comply and meet the targets factories have had to spend considerable amounts upgrading and replacing equipment.  Many smaller factories have closed and costs have increased considerably for those who have been able to make the changes.  One of the hardest hit areas is galvanised steel. Galvanising is a particularly ‘dirty’ process and so the costs in cleaning it up is greatest.

What’s the implication for those looking to import steel and steel products? The first and obvious effect is rising prices particularly for galvanised products – it does take a while to filter through but as stocks get used up the price rises will filter through.   This will particularly effect the construction industry and scaffolding companies.  As second very important area of concern is the large number of factories closing – often leaving customers out of pocket.  This can be disastrous for buyers but can usually be avoided if buyers take the right measures.  If you don’t know how to do that give us a call we will be happy to help.