China: Ferrous scrap imports spurt in Jan-Nov’21

China recorded a massive jump of 2080% in imports of recycled steel raw materials or ferrous scrap in Jan-Nov’21. The world’s leading steel producer imported 4,78,281 tonnes (t) of ferrous scrap in this period as compared to 21,936 t in the same period last year (Jan-Nov’20), as per customs data maintained with SteelMint.

• Imports from Japan spike: Chinese mills imported 3,41,336 t of scrap from Japan in Jan-Nov’21, a humongous rise of 4673% as against 7,151 t in the same period last year. However, on a monthly basis, China imported 15,205 t from Japan in Nov’21, a rise of 287% as against 3,930 t in Oct’21.

Chinese mills seemed to be highly interested in concluding deals for Japanese ferrous scrap on improved buying interest for high-grade material and increased profit margins.

• Imports from South Korea jump: South Korean mills exported a total of 90,261  t of ferrous scrap to China in Jan-Nov’21, a significant rise of 757% as compared to 10,533 t in Jan-Nov’20. Following South Korea was Hong Kong which supplied 12,820 t to China in Jan-Nov’21.

Why have imports surged?

On 31 Dec’20, China’s Ministry of Industry and Information Technology jointly issued a notice to confirm the duty-free imports of recycled raw material for steelmaking with effect from 1 Jan’21.

This move was taken to encourage steelmakers to import recycled steel raw materials and promote the high-quality development of the country’s steel industry. Following this, scrap imports in China have resumed this year, increasing sharply y-o-y. However, the volumes have been still lower than expected.

Outlook

Chinese ferrous scrap imports may not see a sharp increase in Dec’21 considering disparity in bids-offers from Japanese suppliers. However, in the long run, the country’s scrap consumption is likely to remain supported. The Baowu Group, the world’s largest steel manufacturer, recently said its electric arc furnace (EAF) steel output accounted for only 6.5% of its total crude steel output of 115 million tonnes (mn t) in CY’20, a key reason why decarbonising its blast furnaces and converter routes was so crucial to it. The group aims to eventually boost scrap consumption to 50% in its converters, as per a report.