China: Ferrous scrap imports rise by 11% in Q1CY22

China’s recycled steel raw materials or ferrous scrap imports stood at 43,031 tonnes (t) in the first quarter of CY22 (January-March 2022) compared to 38,602 t in the same period last year, witnessing a 11% hike on a yearly basis.

However, imports fell by 22% against 54,992 t recorded in the last quarter (October-December 2021), as per customs data maintained with SteelMint.

“The country has started importing materials to better serve its new economic development model. Beijing, for the rural areas, will further improve the commercial and logistics networks to facilitate the consumption among the local citizens, while in the urban areas, the focus will be on upgrading for greater convenience and higher quality”, a Chinese source said.

Why have imports increased in Q1CY22?

• Adoption of advanced technologies, equipment: MIIT had issued a guidance, promoting advanced technologies to upgrade the production process to meet global competitiveness, a Chinese source informed SteelMint. As a result, the scrap recovery and processing system improved, and demand for raw materials also surged.
• Setting up of electric-arc furnaces: China has increased the EAF furnaces proportion to 20% from 10% earlier. EAF-route steelmaking uses scrap as the main raw material.

Also, the country aims to secure 300 mnt of steel scrap resources by 2025 (with the domestic supply of 240 mnt last year) for which it will have to rely on imports to some extent.

• Construction-infra projects resume operations: The Chinese government stressed on accelerating few key projects of infrastructure development to boost the economic growth of the country in Q1.

Loading country statistics

• Imports from Japan boost: Chinese mills imported 26,813 t of scrap from Japan in Q1CY22, a rise of 12% as against 23,923 t in Q1CY21.

However, on a q-o-q basis, imports dropped by 20% from 33,564 t in Q4CY21. Chinese buyers continued to bid low for imported Japanese HRS 101 grade scrap. Thus, the bid-offer disparity has kept trade slow q-o-q.

• Imports from South Korea rise: South Korean mills exported a total of 9,864 t of ferrous scrap to China in Q1CY22, an increase of 9% as compared to 9,021 t in Q1CY21.

Outlook
Chinese steel mills appear to be more interested in procuring scrap, as they are highly active in construction projects. However, due to rise in Covid cases, the Chinese authorities might extend the lockdown to control the situation which can hamper the mills’ operation.