China: Ferrous scrap imports rebound to two-year high in CY’21

China recorded a massive jump of 1938% in imports of recycled steel raw materials or ferrous scrap in CY’21 (Jan-Dec’21). The world’s leading steel producer imported 5,01,992 tonnes (t) of ferrous scrap last year as compared to 24,633 t in Jan-Dec’20, as per customs data maintained with SteelMint.

Country-wise breakup

• Imports from Japan spike: Chinese mills imported 3,55,765 t of scrap from Japan in Jan-Dec’21, a humongous rise of 4630% as against 7,522 t in the same period last year.

However, on a monthly basis, China imported 14,429 t from Japan in Dec’21.

Chinese mills seemed to be extremely interested in booking Japanese ferrous scrap on improved buying interest for high-grade material such as heavy scrap (HS) grade, HRS 101 and busheling, and increased profit margins.

• Imports from South Korea rise: South Korean mills exported a total of 94,514 t of ferrous scrap to China in Jan-Dec’21, a significant rise of 675% as compared to 12,200 t in Jan-Dec’20.

Following South Korea was Hong Kong which supplied 13,133 t to China in Jan-Dec’21.

Why have imports boosted in CY’21?

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

This step was taken to inspire Chinese steelmakers to import recycled steel raw materials (which had fallen from CY’17) and encourage the high-quality progress of the country’s steel industry. Following this, scrap imports into China have recommenced this year, increasing sharply y-o-y.

Imports rose mainly during the second quarter of the year, as many buyers were unsure about new import regulations in the first quarter.

Outlook

Chinese ferrous scrap imports may not see a sharp increase in the coming months considering disparity in bids-offers from Japanese suppliers. However, in the long run, the country’s scrap consumption is likely to increase.

For instance, with China Baowu Group recently unveiling a timeline for its carbon emissions reduction plans, the conglomerate has also revealed a stepped-up scrap usage agenda. 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.