Survival challenges for China's scrap steel recycling and processing industry

In 2024, China's steel industry faced significant operational challenges, notably a sharp decline in the volume of scrap steel processed by accredited enterprises. Additionally, the proportion of processed scrap steel relative to national consumption saw a slight decrease. According to a Mysteel survey, among 825 accredited domestic scrap steel processing enterprises, total processing volume in 2024 dropped by 10.87 million tonnes compared to 2023, reflecting a 9.76% year-on-year decline. This resulted in a 3.66 percentage point reduction in the share of national scrap steel consumption.

This decline can largely be attributed to increased risks faced by accredited scrap steel processing enterprises, which are constrained by limited operational flexibility. Moreover, due to the prevalence of tax-free transactions in the renewable resources industry, there is a lack of invoices in the upstream scrap steel sector. As a result, recycling and processing enterprises involved in tax-inclusive transactions are burdened with high taxes.

To help the Chinese scrap steel recycling and processing industry overcome these challenges, it is essential to implement strategies such as creating a "Unified Market," strengthening VAT legislation to improve tax oversight, introducing "Reverse Invoicing" practices, and utilizing technology to enhance operational efficiency. These measures are crucial for the industry's survival and long-term growth.

Written by Changqin, qinchang@mysteel.com

Edited by Hannah Yang, yangqi@mysteel.com

This article is part of the MIOA Narrative&Numbers Weekly Report. If you want to know more, please contact us.

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