China world’s top steelmaker has been witnessing sharp increase in steel scrap ratios in its steel production. The increasing figures of scrap consumption is an indicator of Chinese steel industry has started stepping forward to greener steel making against environmental issues.
As per recently released estimations from CAMU (China Association of Metal Scrap Utilization), the scrap consumption in steelmaking in the country is expected to reach 140 MnT for the entire span of year 2017. The scrap consumption in China has already surpassed 100 MnT mark during first three-quarters of CY17 which was 57% Y-o-Y higher against just 64.47 MnT during Jan-Sept’16.
China’s scrap consumption ratio increased to 17-18% in 2017 as compared to 10-12% during CY16 while by 2025 which is likely to cross 30-32%.
Over a concern of environmental issues, China had closed down obsolete induction furnaces with more than 140 MnT production capacities but these have already been replaced by 30 MnT of EAF capacity in 2017 and another 20-30 MnT EAF capacity would be added by 2018.
Ferrous scrap prices rose sharply in Dec’17 as against prices in 2016 –
Average domestic scrap purchase price in Jiangsu province increased sharply by upto RMB 550/MT in Dec’17 in China. Average price noted highest at RMB 2680/MT in Dec’17 as against RMB 2130/MT in Nov’17. During CY16, the average domestic ferrous scrap purchase price in China was approximately at USD 250/MT (RMB 1600) while in 2017, the average domestic ferrous scrap purchase price raised at USD 288/MT (RMB 1840).
However, as compared to the cost of raw materials used in a blast furnace (i.e. Coking coal and Iron ore), the scrap prices remained higher during CY17. Although with rising steel prices in the domestic market, Many of Chinese mills have raised their scrap feed in steel-making. This has led to increase in domestic scrap prices and reduced export parity.
China’s crude steel output to fall amid steel cuts announced – China’s total output of crude steel increased by 5.7% Y-o-Y to 831.73 MnT in CY’17 against 786.88 MnT in CY’16. However, production is expected to fall in the beginning of 2018. China’s Ministry announced a plan to cap steel production rates at 50% of capacity during 15 Nov -15 Mar’18 in heavily polluted cities like Tangshan, Handan etc amid winter heating season.
China ferrous scrap exports skyrocketed in 2017 – China’s scrap exports surged sharply in 2017 and crossed 2 MnT during Jan-Nov’17. During the first eleven months of CY17, China’s ferrous scrap exports summed up at 2,044,706 MT which was skyrocketed compared with the minor ferrous scrap exports during Jan-Nov’16. Major importers of ferrous scrap from China were Indonesia (30%), Thailand (15%), Vietnam (13%), Taiwan (13%), Malaysia (8%) and India (6%).
China’s ferrous scrap imports increased 12% during Jan-Nov’17 – China imported over 2 MnT ferrous scrap again in 2017 with rising scrap consumption in steelmaking in the country. China imported 2.10 MnT ferrous scrap during Jan-Nov’17 which has shown 12% growth Y-o-Y against 1.88 MnT ferrous scrap imports during the same time frame of CY16. Major suppliers of scrap were Japan (78%), United States (11%) and South Korea (3%).
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