China Steel Industry Summit for 2022 Market, hosted by SteelHome, was successfully held in East China’s Nanjing City during 29-31 October, 2021. Over 900 delegates from governments, associations, steel mills, miners, traders, research institutes and media attended the summit.

Feng Helin, vice secretary general of the China Association of Metalscrap Utilization (CAMU), delivered a speech titled China Steel Scrap Industry and Its Outlook. Here are some key viewpoints from his speech.

Rising Steel Scrap Utilization

China steel scrap utilization rate climbed to 20.5% in 2018, meeting the government’s target ahead of schedule for the 13th Five-Year Plan period (2016—2020).

China produced 1.065 billion tonnes of crude steel in 2020, with annual growth of 7%. It consumed 232.6 million tonnes of steel scrap last year, with the annual growth of 7.7% percent. The integrated unit consumption of steel scrap was 218.5 kg/t, up 0.8% y/o/y. The country’s steel scrap utilization rate rose by 0.18% to 21.85% last year. Its EAF steel ratio increased by 0.17 percentage point to 10.37 percentage point in 2020.

China produced 671.07 million tonnes of pig iron in the first 9 months of this year, down 1.3% y/o/y. The crude steel output rose by 2% to 805.89 million tonne during the same period. Meanwhile, it consumed 183.17 million tonnes of steel scrap, up 18% y/o/y. The integrated unit consumption of steel scrap was 227.3 kg/t, up 14.5% y/o/y. The country’s steel scrap utilization rate rose by 2.87 percentage points to 22.73 percentage points last year. The EAF steel ratio increased by 1.47 percentage points to 11.12% during the same period.

Imbalanced Distribution of Scrap Resources

The distribution of China steel scrap resources is imbalanced, above 80% resources in Northeast China, North China, East China, Hubei, Sichuan, and Guangdong as these areas with dense populations and centralized industrial and mining companies.

China generated 260 million tonnes of steel scrap in 2020, up 8% y/o/y. Around 230 million tonnes was consumed in steelmaking sector, around 20 million tonnes was used in casting industry, and the left 10 million tonnes stocked at the national treasury.

Trending Topics

(a)   Standard of Companies Allowed to Processing Steel Scrap

(b)   To Boost Blockchain Innovation and Application

(c)   Existing Problems: (1) China’s steel scrap usage only at 18.3% during the 13th Five-Year Plan period (2016—2020) which far behind the average international level (36%); (2) fragility and instability on the supply chain of Chinese steelmaking raw materials as we can see from the iron ore market; (3) the steel scrap tax rebate policy not fully implemented. Currently, only 129 companies who allowed to process steel scrap enjoy the tax rebate, accounting for 34% of the total 379 companies who allowed to process steel scrap so far.

Outlook

With the strict environmental inspections and the country's work to achieve carbon peaking and carbon neutrality goals under the new development philosophy, steelmakers in China will increase scrap usage rather than iron ore in the future.

CAMU will help ensure the volume of scrap processing taking up above 80% consumption in China, cultivating leading steel scrap companies to improve industry concentration ratio, increase China’s steel scrap usage to above 30% in the late 14th Five-Year Plan period (2021-2025), and Dalian Commodity Exchange to successfully list steel scrap futures.