According to Metallurgical Industry Association of the Federation of China, China steel enterprises are faced with three challenges.
1. Challenge from low carbon economy. As a big carbon producer, the steel industry is making 14% of China total CO2. And it may be faced with new taxes, and great pressure of shaking off the old path featured by heavy pollution and being low-end and extensive.
2. Volatile exchange rate, inflationary expectation and adverse effects cast by property curbs shall be steel industry challenge. Yuan appreciation is more harmful in eating into steel export and demand of the downstream than favorable in reducing materials costs, inflationary anticipation may lead to higher interest rate and tightening of liquidity while property industry curbs will hurt the demand for rebar.
3. Steel regulation is getting tough. The state council and relevant policy makers have made a stream of measures in a bid to carrying out steel industry policy, like to control its capacity wash out the backward, save energy and reduce emission, push forward consolidation, increase concentration rate and competence, enhance technical reform, promote upgrading and product quality, pick up restructuring and transformation of development mode. All indicates disappearing of a relaxed environment.