China’s central government had set the elimination of induction furnace-based steel by June 30 as the cornerstone of its supply-side structural reforms of the industry this year. China has closed capacity totaling about 120 MnT/annum of induction furnaces at more than 600 companies nationwide. It was earlier thought that these Induction furnaces will be sold as scrap, but on the contrary they have been shipped to countries like Indonesia, where the Chinese companies have joint-ownership.
Why Indonesia?
Many of the induction furnaces abandoned in China have been shipped to Indonesia. Moreover, steel scrap from China is heading for Indonesia, as most of the mills in Indonesia have Chinese companies in part-ownership. Also, demand for scrap has risen from mini blast furnaces for hybrid steel production and electric arc furnaces, which is increasing now in Indonesia.
Custom figures show 500,000 MT of steel scrap was exported from China in September, of which 160,000 MT was shipped to Indonesia.
However, the 40% tariff on steel scrap export from China is a bottleneck and electric furnace construction is fast progressing in China. As a result, the high export figures from China could be temporary, once the winter steel production curtailment put in place by China’s central government ends on 15 Mar’18.
China’s Steel Scrap Exports On The Rise
China – world’s largest scrap producer and consumer has registered a growth of 23% M-o-M in its ferrous scrap exports in September’17. According to recently released customs data, the country exported 508,120 MT ferrous scrap in Sept’17 compared to 411,220 MT ferrous scrap in Aug’17.
Besides the strong growth in both its steel scrap usage and imports, there has also been an increase in its steel scrap exports – caused by the country’s elimination of its induction furnaces.
On yearly basis, China has witnessed a mammoth growth in its exports in Sep’17 as ferrous scrap exports were just 48 MT in Sep’16.
During the first nine months of CY17, China’s ferrous scrap exports summed up to 1.38 million tonnes.
Indonesia remained the largest destination for Chinese ferrous scrap in September and imported 162,047 MT, amounting to 32% share in total Chinese ferrous scrap exports in Sep’17.
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