China’s New Carbon Footprint Rules Could Reshape Steel and Cement Industries; Indirect Steel Production Cut?

China's Ministry of Industry and Information Technology (MIIT) recently released its first recommended standards for calculating the carbon footprint of industrial products, covering key categories such as steel, cement, and lithium-ion batteries. These new standards aim to drive low-carbon transformations across industries, fostering sustainable development and aligning with China’s carbon neutrality goals.

While the initiative is expected to accelerate the green transition, industry experts anticipate significant challenges for smaller mills and manufacturers. Many smaller players, already operating on thin margins, may struggle to meet the stringent carbon footprint reporting and reduction requirements due to limited financial and technological resources. Compliance with the new standards could entail costly upgrades to equipment and processes, leaving smaller firms at a disadvantage.

This could lead to industry consolidation, with larger, well-funded enterprises absorbing market share as smaller mills are forced to exit or merge. Consolidation may streamline the sector, allowing for greater efficiency and investment in cleaner technologies, but it also raises concerns about reduced competition and job losses in local communities.

As the implementation of these standards unfolds, China’s industrial landscape may experience a shift, with fewer but stronger players driving the nation’s push toward carbon neutrality and sustainable growth.