SMM China Steel Scrap & EAF Monthly — Keeping you in touch with the Chinese ferrous metals markets

SMM China Steel Scrap & EAF Monthly

Keeping you in touch with the Chinese ferrous metals markets

Over the past years, the high iron ore prices are significantly eroding profits of Chinese steel mills. To date, iron ore prices have skyrocketed 38.3% (on a year-on-year basis), while steel scrap prices has only risen around 2.5%, highlighting the cost advantage of steel scrap as an alternative to iron ore. However, import restrictions on steel scrap made it impossible for steelmakers to raise their use ratio of the material significantly.

China imported 28,600 mt of steel scrap in H2 2019, a decline of 81.62% compared to H1. Steel scrap imports decreased further in the first half of 2020. Accumulated imports in H1 stood at 10,500 mt, down 93.3% from the same period of 2019. The sharp decline of China’s steel scrap imports is due to the solid waste law of scrap metals. Solid waste including steel scrap, copper scrap and aluminium scrap have been included in the Catalogue of Restrictive Solid Waste Imports Allowed to be Used as Raw Material, effective July 1, 2020.

High prices and the import policy have driven a significant increase in imports of semi-finished products like directly-reduced iron and billet. Directly-reduced iron imports in H1 stood at 1.61 million mt, increasing 420% year-on-year. Billet imports surged 992.6% year over year to 5.54 million mt.

In addition, an increasing number of market participants are appealing for liberalising import restrictions on steel scrap as this could help reduce raw material costs for steelmakers.

On the other hand, the Chinese government is formulating new steel scrap import standards, which may change “steel scrap” into “recycling steel materials” so as to avoid imports of inferior steel scrap. The new standards also propose that imports of “recycling steel materials” may not be completely subject to the domestic steel scrap standards, but rather be classified into high-quality structural steel scrap, ordinary structural steel scrap, railway steel scrap, packaging materials (coated and non-coated), and crushed materials, in order to better comply with the international steel scrap standards.

It is expected that opening up the import of steel scrap will be the general trend in the future, which will be a rare opportunity for foreign scrap traders.

We are glad to present you with the SMM China Steel Scrap & EAF Monthly to keep you updated of the changes of demand/supply of the China steel scrap industry chain.

In the China Steel Scrap & EAF Monthly report, we provide you a deep-dive of the China domestic steel scrap market, as our analysts conduct detailed surveys on the daily price, operating rates, output, capacity, inventory changes, arrival and daily consumption of steel scrap.

We also cover the latest demand/supply updates across the Steel Scrap & EAF steel industry and its related products (including rebar, iron ore, pig iron) to provide you a comprehensive overview of the EAF industry chain.

Please get in touch with your sales representative for a trial copy or contact us at Service.en@smm.cn for more information.