China’s revised Environmental Protection Law which some have dubbed “the strictest in history” will take effect on Jan. 1.
No steel manufacturer in China has met the requirements stipulated in the new law so far, according to Liu Tao, a senior engineer at the China Metallurgical Industry Planning and Research Institute. He estimated that the entire steel industry would have to spend 90-110 billion yuan (US$14-$18 billion) on improving their facilities in order to meet the requirements.
The improvement projects are also expected to raise operation costs by 80 billion yuan (US$13 billion) per year due to maintenance fees and other expenses, he said. Yet at a time when the steel industry is experiencing a slowdown, steel producers have shown little interest in such projects though, the Beijing-based China Times (not our sister paper) reported. In 2013, the average profit margin of China’s steel industry was only 2.16%, with 23.4% of manufacturers operating at a loss.
Vice president of Hebei-based Tangshan Iron and Steel Group Li Yidong told the daily that nearly all steel products in China are in a state of oversupply, with the production utility rate of most products standing at below 80%.
Xu Xiangchun, an executive at steel market data vendor Glinfo.com, stated that the steel industry was adopting a wait-and-see approach towards the new law because it has yet to take effect.
In addition, industry analyst Liu Xinwei from SCI99 Inc said many steel makers had hoped the government would postpone the implementation of the law and give them a buffer period.
If the law is stringently enforced, it will have a tremendous impact on the steel industry, Liu predicted.
“Many manufacturers will have to suspend production to make way for improvement projects. If they cannot endure the costs involved, some of them will be eliminated from the market,” Liu was cited as saying by the newspaper.
Source: Want China Times
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