Scrap pre­dicted to play big­ger role in China’s steel­mak­ing in­dus­try

China Daily (Hong Kong) - - BUSINESS - By MENG FANBIN meng­fan­bin@chi­nadaily.com.cn

China’s iron ore de­mand is ex­pected to see a con­tin­u­ous de­cline in the next few years, due to grow­ing aware­ness of en­vi­ron­men­tal pro­tec­tion and in­creased con­sump­tion of scrap steel, ex­perts said.

In 2020, China’s iron ore con­sump­tion is ex­pected to reach 960 mil­lion met­ric tons, a de­cline of 150 mil­lion tons year-on-year, ac­cord­ing to a re­search note from In­dus­trial Se­cu­ri­ties.

“In the fu­ture, with more scrap be­ing used by Chi­nese steel com­pa­nies, iron ore de­mand will drop grad­u­ally,” it said.

As a greener ma­te­rial in steel­mak­ing, scrap helps to re­al­ize the aim of en­ergy sav­ing and emis­sions re­duc­tion in the iron and steel in­dus­try, by re­duc­ing the man­u­fac­tur­ing pro­cesses re­quired.

Since the be­gin­ning of this year, the scrap ra­tio has markedly in­creased in China’s steel­mak­ing in­dus­try.

Con­sump­tion of scrap steel in China was 25.3 mil­lion tons in the first quar­ter of this year, an in­crease of 29.7 per­cent year-on-year, with a scrap ra­tio of 12.58 per­cent, up from 11.1 per­cent in 2016.

How­ever, the av­er­age global scrap ra­tio was 51.6 per­cent, with the fig­ure reach­ing 75.6 per­cent in the United States and 90 per­cent in Turkey.

Gen­er­ally speak­ing, the pro­por­tion of scrap used in China’s steel in­dus­try is around 2 to 3 per­cent.

Coke prices have in­creased at a rapid pace since last July, greatly in­creas­ing the cost of smelt­ing steel with iron ore.

How­ever, scrap prices are lower, and more com­pa­nies are try­ing to in­crease the scrap ra­tio in steel pro­duc­tion, said Gan Yong, pres­i­dent of the Cen­tral Iron & Steel Re­search In­sti­tute.

In 2015, the Iron and Steel In­dus­try Ad­just­ment Pol­icy is­sued by the Min­istry of In­dus­try and In­for­ma­tion Tech­nol­ogy pointed out that China’s steel­mak­ing scrap ra­tio should reach 30 per­cent.

The China As­so­ci­a­tion of Metal Scrap Utiliza­tion’s 2016-20 plan, pub­lished last De­cem­ber, said that China’s scrap steel ra­tio should reach 20 per­cent by 2020.

China’s steel out­put and con­sump­tion have now both reached sat­u­ra­tion point, and the pe­riod of rapid ex­pan­sion is over, the re­search note said.

With the elim­i­na­tion of in­fe­rior steel, more scrap will en­ter the mar­ket, be­cause 65 mil­lion tons of waste steel was used to make in­fe­rior steel, said Li Xinchuang, pres­i­dent of the China Met­al­lur­gi­cal In­dus­try Plan­ning and Re­search In­sti­tute.

“The steel from elec­tric fur­naces is ex­pected to in­crease sig­nif­i­cantly,” Li said.

The CAMU pre­dicted that China is ex­pected to have 10 bil­lion tons of steel by the end of 2020, with waste steel ac­count­ing for the pro­duc­tion of around 200 mil­lion tons.

the ex­pected amount of China’s iron ore con­sump­tion in 2020 es­ti­mated an­nual out­put of scrap steel in 2020

LIU DEBIN / FOR CHINA DAILY

A worker pro­cesses scrap metal at a Dong­bei Spe­cial Steel Group plant in Dalian, Liaon­ing prov­ince.

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