“Two Sessions” delegates suggest freeing scrap imports

When participating in the group discussions during the ongoing “Two Sessions” in Beijing, a few representatives from the Chinese shipbuilding and steel industry proposed to Beijing to nurture its steel scrap industry including removing steel scrap from the category of “imported rubbish” so as to free up the restriction.

Dong Qiang, chairman of China State Shipbuilding Co (CSSC) over 2015-2018, suggested to remove ship plate scrap from the “imported rubbish”, as Chinese shipbreakers have had over 100,000 tonnes of ship plate scraps on the hands of its shipbuilders, unable to go through China’s Customs clearance yet since the government has restricted imported steel scrap imports starting July 1 2019, according to a post on the China Association of Metalscrap Utilization (CAMU).

As a common practice, shipbreakers take care of the scrap once the vessels are dismantled, and China owns 118 shipbreaking companies accounting for the world’s 40% shipbreaking market share, among which 80% of the shipbreaking contracts involve carriers under the foreign ownership, according to a post on CSSC, quoting the comments from Ma Jiayou, a CSSC employee and also a “Two Sessions” representative.

Cao Zhiqiang, chairman of Hunan Valin Iron & Steel Group, also suggested the same when interviewed by a Chinese media during the “Two Sessions”.

“Steel scrap is a substitute of iron ore in large quantities, and higher supplies will not only enable the country to have a bigger say and to take an proactive role in iron ore pricing but also to reduce any potential risks from too heavy reliance on imported iron ore,” he said.

He admitted that China’s steel scrap industry is still in an early stage with a series of issues such as low concentration level, backward technology, high cost, lack of standardization in quality and preferential policy, all of which will obstruct the industry from development.

To nurture the domestic steel scrap industry to realize the target of increasing steel scrap utilization in steelmaking to 30% of the total by 2025, the Chinese authority should set up a systematic steel scrap generation system, a nationwide identical taxation relief scheme, a more detailed categorization of scrap generation enterprises for higher efficiency and professionalism, he elaborated.

Besides, Beijing should allow free imports of steel scrap but at the same time restrict exports of premium-quality steel scrap especially at low prices.

In the long term, China’s steel industry needs to intensify its study in higher steel scrap utilization in blast-furnace and electric-arc-furnace utilization and 100% steel scrap utilization in certain steelmaking process.

For the whole 2019, China was estimated to have consumed 215 million tonnes, or 168kg in per tonne of steelmaking, up 9.8% on year, according to Sun Jiansheng, Secretary General of CAMU in mid-December 2019.

Written by Hongmei Li,