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Furnace closures drive Chinese scrap exports

The closure of induction furnaces across China has prompted flows of displaced steel scrap to India, Japan, South Korea and Taiwan, despite the country’s 40% export duty.

Tom Bird

Tom Bird

Tom Bird (pictured) of Liberty Steel told the Bureau of International Recycling (BIR) conference in Hong Kong that higher exports were the result of the Chinese crackdown on unlicensed furnaces and the steel produced by them.

Ferrous division president William Schmiedel of Sims Management Global Trade suggested the exports were likely to be a temporary phenomenon because China had the potential to melt significantly higher volumes of scrap in future.

Li Shubin of the China Association of Metal Scrap Utilization said China was aiming to boost its annual steel scrap usage in production from less than 100 million tonnes currently to 150 million tonnes by 2020, and to achieve a 30% scrap ratio by 2025 compared with 11% in 2016.

Worldsteel figures show China is the world’s biggest steel scrap user, with consumption growing by 8% in 2016 to 90.1 million tonnes, the highest level since 2011, while reducing steel imports by 7% during the same period.

Dr Ye Chen of the Shanghai Futures Exchange said scrap steel was going to be “a rising star” in China owing to cost concerns and environmental considerations.

Bird, a member of the ferrous board, said the global outlook for the steel scrap market this year “remains relatively positive”, adding that demand should stay healthy and there was a good supply/demand balance.

Schmiedel considered the ferrous scrap industry to be “on a much sounder footing” than a year ago.


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