Visit of Xi Jinping to the UK, investment and steel price

This week the big news is the visit of the President of China, Xi Jinping, to the UK.   Chinese investment in UK nuclear power is one of the main topics and a contract will be signed for Hinckley Point Nuclear Power Station.  There is also investment in the North West to be sought.  In the list is HS2 the high speed rail link to Manchester. Also investment in Manchester Airport City and the ‘Northern Powerhouse’.   55,000 houses are proposed to be built in Manchester up to 2027, that’s around 5,000 a year.  A project called ‘The Atlantic Gateway’ seeks investment for the area between Manchester and Liverpool.

On a more negative side the guaranteed price for Hinckley Point electricity is £92 a MegaWatt according to the BBC website. This compares with £27 for standard electricity, although £125 for offshore wind.  Solar and on-shore wind being around £80.  There is a lot of money being put into expensive ‘green’ power and that’s another subject.

That leads to the other negative point which is the closure of the Redcar Steel Plant and redundancies at other steel plants.  One of the factors being that China now produces half of the world’s steel and a market slowdown has caused a glut reducing the price of steel to a half.  Some are accusing China of dumping cheap steel.  Although others say that is the price and the UK isn’t alone.  Other factors in the UK are energy prices which are said to be double those of other EU countries, because of green levies.  Also it is said that UK companies pay Business Rates on their property including the equipment on site.  Whereas equipment is excluded in most EU countries.  The government is being asked to intervene and there seems to be a good case.  If this is a short term market fluctuation then surely it is folly to lose your capability and then be dependent on overseas steel. Others may say that Redcar has been struggling for some time.   However Sajid Javid the Business Secretary seems to avoid the market fluctuation point and uses the EU as an excuse to take no action to save the plant. Instead the government seem to want to offer help to turn it into something else.  It appears that for some 15 years energy intensive industries have been put on the block by successive governments chasing plaudits for ‘green’ credentials.  So the Chinese over-production factor seems to be only an element in a complicated story involving our own governments over the years.

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