Imports of steel scrap totalled 230,000 mt in the first four months of 2023, up 204% YoY. With the liberalisation of imports of raw materials for secondary steel from January 1, 2021, steel scrap imports have been increasing steadily. Yet, China's steel scrap imports are at an extremely low level mainly because there are only five customs commodity codes corresponding to the types of steel scrap that can be imported. The import standards for specification and impurity content are stringent and some details are not clearly defined.
As some steel scrap of different grades is usually mixed before being imported, it is still difficult for international mainstream scrap types to enter the Chinese market, which will greatly limit the volume of imported steel scrap. Luo Tiejun, vice president of the China Iron and Steel Industry Association (CISA), said in a speech: Over the past two years since the import of steel scrap has been liberalised, the import volume has remained at around 550,000 mt, well below that of neighbouring countries such as India and Vietnam. Due to the above problems, the CISA proposed to revise the standards for renewable resources import, which has been included in the revision plan of the National Standards Committee for this year.
As prices are high and steel scrap cannot be imported, the import volume of semi-finished products such as directly reduced iron and steel billets surged in 2020.
According to customs data, China imported 3.458 million mt of directly reduced iron in 2020, a year-on-year increase of 153.3% and a combined 18.335 million mt of steel billets were imported, a year-on-year increase of 499.9%. However, this situation changed in 2021 with the liberalisation of imports of raw materials for secondary steel. In 2021, China's imports of directly reduced iron fell 54.9% year-on-year to roughly 1.3 million mt. In 2022, China’s imports of directly reduced iron tumbled 29.9% to 921,000 mt, which is also linked to the surge in overseas steel prices in the first half of the year. Domestic steel consumption could hardly rebound in 2023. Before the scrap import policy is relaxed, China's scrap import volume can barely grow.
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