The
China Metallurgical Information and Standardization Institute, or CMISI,
has begun to rally support from industry participants to accelerate its
appeal for the country to open its doors for ferrous scrap imports.
The
steel body is planning to hold an industry event in Tianjin later this
week, and will open discussions and feedback across the floor to
participants including, electric arc furnace steelmakers, scrap
processors and yards, traders, and financial institutions, amongst
others. This is expected to contribute toward the creation of a national
standard for scrap, which will be used to promote imports of the raw
material.
This
step forward was hailed by local electric arc furnace steelmakers, as
scrap prices have been a bugbear since the country shuttered its doors
to its importation.
The
local industry too has continued to struggle with numerous
non-standardized classifications of scrap, particularly leading to
fragmentation whereby different mills have various expectations of scrap
qualities and specifications.
CMISI,
together with the China Association of Metal Scrap Utilization, or CAMU,
previously in March announced its proposal to be among those that
spearhead the lifting of import bans and restrictions on scrap for
Chinese steelmakers.
Part
of their plans were to push for the imports of only high quality scrap —
proposed to be dubbed recycling steel materials — which fell in line
with the direction of the country’s environmental ministry.
“There
are still a lot of hurdles and steps required to push for this,” a major
eastern mill source said. “Realistically, we doubt the restrictions will
be lifted this year, but with each step forward, hopefully we can see
some positive results next year.”
The
opposition to scrap imports began in July 2017, as China sought to
prevent itself being the region’s dumping ground for waste. Various bans
and restrictions covering scrap took effect on December 31, 2018, and
later widened in coverage to include more grades from July 1, 2019.
This
changed the game for many in the Asian region, and cause a ripple of
related effects from various customs buildups, stricter importation
rules, and creation of new trade flows relating in mixed, or
unprocessed, scrap.
China
too felt a pinch from its own restrictions, where it created its own
secluded market for scrap. By restricting itself from the importation of
scrap, and together with its current 40% export tax on the commodity,
the country ultimately saw no inflow and outflow of scrap.
As a
result, Chinese scrap prices lost correlation with international prices.
Current prices in China for thick scrap, particularly favored by blast
furnace steelmakers, were $100/mt higher than that within neighboring
Japan, S&P Global Platts reported previously.
With
the country generating about 200 million-220 million mt of scrap
annually, local prices have been kept expensive compared with other
steelmaking nations due to continued high blast furnace demand, and lack
of a strong domestic distribution network.
With
the possibility of China returning to the imports in the near future,
suppliers were looking forward to a possible boost in demand within the
seaborne market, amid falling volumes for most destinations since 2018.
Source: Platts |