According to a press release by Bureau of International Recycling (BIR), last year Chinese steel industry observed 64.2% leap in the scrap consumption which was recorded at 147.9 MnT, prompting a dramatic increase in the proportion of steel scrap used in the country’s steel production to 17.8%.
China’s closure of induction furnaces last year was learned to be the primary reason behind the growth in scrap usage. In 2016-2017, China Iron & Steel completed its capacity-reduction of over 115 MnT, which is a target of the “13th Five-Year” with 150 MnT limit, leaving a scale of just several million tons and which is expected to be completed by this year.
Induction furnace production has been a characteristic of the steel industry in China for many years, but this sector’s production and steel scrap consumption were not included in official figures. Estimates indicate that steel scrap use in the country’s induction furnaces was around 60 MnT in 2016 – and yet these volumes did not feature in official statistics.
Following the closure of the induction furnaces, most of this 60 MnT of steel scrap was used last year by China’s basic oxygen furnace (BOF) and electric furnace (EF) steel producers. That was the reason behind China’s sharp increase in steel scrap usage in 2017.
Chinese ferrous scrap exports skyrocketed in CY17 – During CY17, China’s ferrous scrap exports summed up to 2.23 MnT which have skyrocketed compared with the minor ferrous scrap exports during CY16.
Given that the steel scrap consumed by the now-idled induction furnaces was not included in the figures for 2016 and for preceding years, no direct comparisons can be made with the numbers for 2017.
The increase in China’s steel scrap usage last year is in line with Chinese government plans for a general increase in steel scrap use in domestic steel production. For example, it has been heard that the country’s BOF steelworks are being asked to increase their steel scrap use from 11% at present to at least 20%.
The output of electric furnace steel increased slightly – From the view of electric furnace steel, in 2016, China’s electric furnace steel production was about 42 MnT, of which, Youte Steel’s electric furnace steel output was about 20 MnT. According to Xinyu statistics, in 2017, China’s new electric arc furnace capacity was increased by approximately 31 MnT while the actual increase in output was approximately 16 MnT, and the capacity of remanufactured EAFs after transformation was approximately 8 MnT and around 4 MnT was actually increased output.
In 2017, the actual output of China’s electric furnace steel was about 62.4 MnT, accounting for 7.5% of the total crude steel output and 6.5% of China’s overall steel production in 2017 but these figures are expected to climb over the coming years.
As a result of this development, further investments in steel scrap processing are planned, especially in shredder capacity.
~Inputs from BIR & Xin Sheng Information Electric Steel Sound
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