China lifts restriction on imports of steel scrap for fewer grades

• Recycled steel raw materials that meet the standards of “Recycled Steel Raw Materials” (GB/T 39733-2020) can now be imported freely
• Chinese steelmakers expect to import initially around 6-7 mn t of scrap annually. However, country’s scrap import volume is likely to reach around 12-15 mn t later
• Chinese buyers are expected to focus more on higher grade scrap such as PNS and Busheling
• These measures are expected to lower iron ore import volumes in China
   

On 31st Dec’20, the Ministry of Industry and Information Technology jointly issued a notice to confirm the free import of recycled raw material for steelmaking with effect from 1st Jan’21. This measure has been taken to regulate the import management of recycled steel raw materials and promote the high-quality development of country’s steel industry. 

Recycled steel raw materials that meet the standards of “Recycled Steel Raw Materials” (GB/T 39733-2020) are no longer regarded as solid waste and can be imported freely.

However, products that do not comply with the national standards of “Recycled Iron and Steel Raw Materials” (GB/T 39733-2020) are prohibited.

China’s ferrous scrap imports to rise in CY’21

China’s Ministry has now stopped approving scrap import quotas. The last import quotas for scrap copper, aluminium, steel and paper were published by the Ministry of Ecology and Environment (MEE) Solid Waste and Chemical Management Centre on 19 Oct’20 with a list of importers approved by the ministry. This was the final approval of imports for 2020 and this year’s 13th batch of scrap import quotas was the last to be approved under a system adopted by China some 25 years ago in 1995. 

The new standard is likely to boost Chinese ferrous scrap import volumes. Also, by improving the recycling level of scrap both inside China and overseas and setting the stage of fully tapping the scrap resources it may lower the country’s dependence on iron ore imports. 

China imported around 0.02 mn t of ferrous scrap in CY’20 as against 2.32 mn t in CY’17. Japan occupied a share of 80% in China’s scrap imports in CY’17. Chinese buyers are expected to focus more on higher grade scrap such as PNS and Busheling. Chinese steelmakers expect to import initially around 6-7 mn t of scrap annually. However, country’s scrap import volume is likely to reach around 12-15 mn t in the next year.

In addition to it, there may be 12-15 mn t of additional domestic scrap supplies in China. These are expected to lower iron ore import volumes in China which have increased to 1070 mn t in CY’19.