Chinese steel scrap exports continue to rise amid closure of small induction furnaces and rising scrap generation in the country.
According to recent data published by Chinese customs, it is reported that scrap exports have increased by about 150% to 200,000 mt in June 2017, against 80,000 mt in May 2017. According to the data, China has become next exporter of steel scrap in the month of June. Country exported 200,000 MT of scrap, where as imported 180,000 mt in June.
What is leading to scrap exports in China?
According to industry experts, scrap is going to play an important role in Chinese steel making. Scrap generation is growing owing to government’s measure to eliminate inefficient induction furnaces and rising end of life cycle of goods like vehicles, consumer durable and construction.
The Chinese government’s directive to eliminate scrap-fed induction melting furnaces in the country by June 30, led to a huge turnaround. According to industry estimates, China’s induction furnaces produced around 30-50 million mt last year of steel, which consumed around 40-45 million mt of scrap.
Closure of these induction furnaces has created displaced volumes of scrap, which need to find a buyer. Some of it is being used by domestic mills and some are being exported to Asian countries like, India, Japan, South Korea, Vietnam and Taiwan – even though a 40% export duty is in place.
According to the Data, out of total imports that took place in June, 38 % was made to Taiwan, 14% to Indonesia, 10 % to Vietnam, 7.5% to India and rest to other countries like South Korea, Thailand, Japan, Malaysia, Pakistan and Bangladesh.
Future of Chinese Steel Scrap?
On one hand scrap generation is set to rise significantly and on the other, Chinese steel production is expected to decline by almost 1% per year driven largely by declining domestic demand, decline in exports owing to protective measures adopted by countries and efforts made by government to rationalize the steel industry. This throws a lot of interesting and intriguing questions like
- What will happen to the increasing quantities of scrap getting generated
- What is the potential of scrap exports from China
- Will the Chinese scrap disrupt the global scrap trade dynamics
- Will the charge rates of BOF be increased
- Will there be switch over from BOF to EAF
- Will the iron ore imports decline
- How will the steelmaking profitability be effected
TOPIC TO BE DISCUSSED AT
3rd Steel Scrap & Raw Materials Conference
Avani Riverside, Bangkok (Thailand)
11-12 September 2017
1.How will china impact the dynamics of global Scrap & Steel market?
2.How will scrap supply dynamics shape up in 2017-2018?
3.Will SE Asia remain import dependent or increase its steel production?
Research Manager, CRU, China
Expert Metals & Mining, McKinsey, Belgium