The global share of scrap in metallics consumption has been declining in recent years, driven largely by China’s growing role in the steel industry. As a developing economy, China has had limited amounts of obsolete (or postconsumer) scrap to use as a material in steel making. However, as the country’s products and infrastructure enter the replacement phase, the growing availability of obsolete scrap is likely to fuel a shift from steelmaking based on basic oxygen furnace (BOF) technology to electric arc furnace (EAF) technology that relies more heavily on scrap. In time, this shift will have a significant impact on scrap consumption trends both in China and globally.
Today, scrap recycling in China is a highly fragmented industry that lacks vertical integration and mainly operates under the authorities’ radar. In order to handle growing volumes of scrap, the sector will need to gain scale and efficiency. To date, it has been challenged by the uncertainties surrounding the government’s plans to restructure the domestic steel industry, declines in scrap prices relative to raw materials, and lack of market regulation. Additionally, the government has provided little support for the industry in recent years, despite voicing high ambitions for its future.
How rapidly China’s scrap recycling industry develops will depend on the evolving economics of the industry, government policies, and the pace of the shift in Chinese steel production from BOF to EAF technology or the use of new technologies to increase the amount of scrap used in BOF.
To know how China’s scrap recycling industry will pan out in the coming 15 years based on China’s projected steel production and consumption, its scrap supply and how much of its processors will be able to profitably recycle, and the relative production shares of BOF and EAF please visit: mckinsey.com
TOPIC TO BE DISCUSSED AT :
3rd Steel Scrap & Raw Materials Conference
Avani Riverside Hotel, Bangkok (Thailand)
11-12 September 2017
- How will china impact the dynamics of global Scrap & Steel market ?
- Will SE Asia remain import dependent or increase its steel production ?
- How will scrap supply dynamics shape up in 2017-2018 ?
- How Scrap charge rate can be increased from existing 18-20% to 50% in BOF’s ?
- How to decrease the operating costs of Electric Arc Furnaces ?
Research Manager, CRU, China
Expert Metals & Mining, McKinsey, Belgium