“We are very hopeful that Beijing will allow steel scrap imports again in 2020 instead of a complete ban,” Feng Helin, CAMU vice secretary general shared when speaking at the Mysteel Bulk Commodities Week 2020 Scrap Seminar on December 13 in Shanghai.
Feng described the central government’s decision to include scrap in the restriction catalog in the first place as a “mistake” when the controls took effect last July 1. “The decision is based on misinformation from some sources,” he told delegates.
“It is also absurd for the central government to restrict steel scrap imports while it allows domestic steel mills to rely on imported and domestically-produced iron for steel production,” he elaborated. “The same practice should be applied to steel scrap too.”
The next five to ten years will be the best period for China to nurture electric-arc-furnace steelmaking when the country’s latent reserves of steel scrap will be reaching 13.25 billion tonnes, and domestic steel scrap supply may grow to 340 million tonnes annually.
For 2019, however, domestic steel scrap supply is expected to reach around 240 million tonnes, higher by 20 million tonnes or 9.1% on year, while the consumption of scrap in steelmaking over January-October this year had already grown by 11.4% on year to 176 million tonnes, he said.
Cao Yulong, deputy general manager of Maanshan Masteel Scrap Steel Company Ltd, Maanshan Steel’s own steel scrap processor and supplier, also voted for freeing up the control of steel scrap imports, reasoning that scrap utilization in Chinese steelmaking has been in the middle of optimization and that scrap imports will help the country to progress along the way.
“Steel scrap has been flowing into the legitimate steelmaking sector since Beijing shut down all induction furnaces by mid-2017,” he told the seminar. “The improvement in the steel scrap industry has had largely to do with the government’s policy guidance in the ferrous industry in general, and now is the time for it to promote the mixed utilization of domestic and imported scrap resources.”
Domestic steel scrap prices have been on the rise since 2017 on better demand, according to Mysteel’s data shared by Jin Xionglin, senior scrap analyst, at the seminar, with the year’s average composite pricing index rising to Yuan 2,560.42/tonne ($366.7/t) so far for 2019, from Yuan 2,349/t for 2018 and Yuan 1,755.8/t for 2017.
Steel scrap utilization is eco-friendly, Cao stated. However, “too-high scrap prices have forced us to stop sourcing scrap from social supply, but to rely on our own internal recycling,” he admitted.
China’s steel scrap utilization is expected to steadily grow in coming years, but the constraint in supply will hinder the progress, the speakers agreed at the seminar.
The central government had aimed to increase steel scrap utilization in the country’s overall steelmaking to 20%, but this was already achieved in 2018 with the ratio hitting 20.2%, and so far over January-October, the ratio was at 21.2%, according to the CAMU statistics.
Written by Hongmei Li, firstname.lastname@example.org
Edited by Russ McCulloch, email@example.com