The past year has seen a steady rise in steel prices in China – especially for higher value products such as galvanised steel pipes used extensively in the construction industry. This is on a background of falling domestic demand and a world wide surplus of steel producers which perhaps at first glance makes it surprising. So why is this happening? In 2015 China introduced a series of measures in response to falling demand and pressure to improve air quality aimed at reducing pollution. The effects of this was factory closures and increased production costs. These effects are now tarting to bite with prices for some steel products rising by as much as 15% over the past year.
Looking forward it is likely this trend will continue at least in the short term given China’s over whelming dominance in the steel market, there increasing desire both internally and externally to reduce pollution coupled with a rise in domestic demand as construction recovers from the slump.