China may import 1 million tonnes/month of steel scrap on average if the central government removes the blockage against the imports of this “renewable” raw material for steelmaking, according to the delegates from the Chinese steelmakers and ferrous trading houses at the 2020 National Steel Scrap Conference on November 12 at Haikou, South China’s Hainan province.
China has been tightening the control over solid waste materials imports since the end of 2016 and on July 1 2019, steel scrap has been listed into category of “under restriction” together with other seven types of solid waste materials including aluminum and copper scrap, and the country’s steel scrap imports based on the quota issuance, amount to merely 184,000 tonnes for the whole 2019, market sources noted.
“China’s steel scrap imports (as a result) have been almost completely stagnated”, which has triggered strong displeasure among Chinese steelmakers, Jiang Wei, Deputy Party Secretary of China Iron & Steel Association (CISA), pointed out at the event, though he was hopeful that the restriction may be lifted sometime early next year.
The unhappiness is hardly surprising, as at present, China is capable of generating 240 million tonnes/year of steel scrap, which is insufficient to satisfy the need for 280-290 million tonnes in the domestic steelmaking, according to Li Shubin, vice chairman of the China Association of Metalscrap Utilization (CAMU).
Therefore, China’s monthly imports of steel scrap may well surge to 1 million t/m or around 12-15 million t/y if the barrier is removed, with China’s steel giants such as China Baowu Steel Group, Shagang Group, and Rizhao Steel Holding Group Co probably importing at a rate of 150,000-200,000 t/m, Li estimated.
Li also noted the objection from many Chinese steel mills and market insiders against the government’s restriction on steel scrap imports.
“Even though iron ore imports volume has been staying high, the banning of steel scrap, the best strategic resource, is inappropriate and work against our efforts to reduce carbon emission and industrial solid waste generation, as well as to increase steelmaking ratio via electric arc furnaces,” he shared when presenting at the event.
Meanwhile, China’s steel market sources have been fervently looking forward to the abolishment of the restriction on steel scrap imports, including the trader from a Shanghai-based steel trading house.
“We have been studying the possibility of stepping into steel scrap imports, and we have already established our networks around the world, making it easy for us to do so (when the restriction is lifted),” he shared with Mysteel Global on the sideline of the event.
Even if Beijing allows for free steel scrap imports, “the key still lies in prices,” an official from a steel trading company in East China’s Zhejiang province pointed.
He added, though, “imported steel scrap is holding a strong advantage against the domestic supplies as they are properly invoiced, unlike in China, and some invalid or fake invoices issued by the domestic steel scrap suppliers may get us into serious trouble, cheap supply or not.”
Globally, about 100 million tonnes/year of steel scrap are traded, with the tonnage within the EU countries accounting for 20 million tonnes, and the U.S. and Japan, the top scrap steel export countries, sell about 15 million tonnes and 8 million tonnes of scrap respectively to overseas customers, whereas around 80% of China’s steel scrap imports have been from Japan for the past few years, according to Li.
In 2019, regions and countries near China including Taiwan, South Korea, India, Indonesia Thailand, Vietnam and Belarus imported about 25 million tonnes of steel scrap in total, according to Li.
Written by Olivia Zhang, zhangwd@mysteel.com
This article has been published under an article exchange agreement between Mysteel Global and SteelMint Research.
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