- EAF steelmaking driving stronger scrap consumption growth
- Scrap supply expected to grow to 260 mnt
Mysteel Global: China’s demand for ferrous scrap is projected to expand in 2026, driven by the steel sector’s accelerating transition to low-carbon production and a growing emphasis on electric-arc-furnace (EAF) steelmaking, according to Mysteel’s latest market forecast.
Slight decline in overall scrap consumption in 2025
In 2025, China’s total ferrous scrap consumption fell marginally by 0.7% y-o-y to 256.9 million tonnes (mnt). The decline was mainly in blast furnace (BF) steelmaking, where scrap proved less cost-effective than hot metal. In East China’s Jiangsu province, integrated mills faced an average scrap production cost higher by RMB 32.8/t ($4.7/t) compared with hot metal, reversing the cost advantage observed in 2024.
Despite softer BF demand, scrap usage among domestic EAF steelmakers increased significantly.
Average capacity utilisation across 90 tracked independent EAF mills reached 50.4%, up 4.2% points from 2024. EAF mills maintained steady output even during periods of margin pressure, while some plants underwent ultra-low emission upgrades, ensuring continuous operations.
Scrap Supply and Recycling Initiatives
China’s scrap supply is also expected to increase, reaching 260.6 mnt, up 2% from 2025. Growth is anticipated from the manufacturing sector, aided by consumer stimulus measures promoting large-scale equipment renewal and trade-ins. Government action plans aim to exceed 300 mnt of annual scrap recycling by 2030.
Rising demand and ongoing low-carbon transitions are likely to keep domestic scrap availability tight, potentially supporting upward pressure on steel scrap prices. In 2025, China’s national composite scrap price averaged RMB 2,433/t ($349/t), down 11.4% from 2024.
Outlook
Tighter energy consumption regulations and the EU’s Carbon Border Adjustment Mechanism (CBAM) are expected to further drive EAF production and scrap usage. China’s total steel scrap consumption is expected to rise 1.8% y-o-y to 261.4 mnt in 2026.
Note: This article has been written in accordance with a content exchange agreement between Mysteel Global and BigMint.
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