Plan ahead! Steel scrap processing market sped up adjustment
The Ministry of Industry and Information Technology approved the eleventh batch of 135 steel scrap processing bases. Currently, more than half of the 824 white listed companies occurred in the past three years.
•On November 20, the Ministry of Industry and Information Technology (MIIT) announced the eleventh batch of 135 white listed companies that meet Admittance Conditions of Scrap Steel Processing Industry, and revoked the white-list qualifications of 17 companies.
•This was the fourth time in the past three years that a white-list of steel scrap processing bases was released. More than half of eleven batches of steel scrap processing bases admitted by the MIIT obtained access qualifications in the past three years. (There were currently 824 steel scrap processing companies admitted by the MIIT).
•SMM predicted that China will make major changes to steel scrap processing market in the next two years: In recent years, it can be seen that officials were accelerating the construction of a standardized steel scrap processing market. As of the end of 2023, China's steel scrap processing capacity was close to CAMU’s proposed plan of 200 million mt/year that steel scrap processing companies admitted by the MIIT need to reach by the end of the "14th Five-Year Plan". Judging from the proportion of EF steel, the proportion of China's EF steel production need to hike more than 15% in 2025, which will be hard to achieve, based on current situation. In the next two years, steel scrap processing market will enter a period of market adjustment with a large number of companies admitted.
Plan ahead! Steel scrap processing market sped up adjustment
The proportion of processing bases affiliated to steel mills kept mounting;
The market was further concentrated towards leading manufacturers.
•There were a series of factors, like implementation of the EU carbon border tax, downstream pursuit of low-carbon steel, the steel industry entering a cold winter, transformation and upgrading of major steel mills, etc. Currently, steel scrap processing bases were in a tough position, and even suffering sustained losses amid shrinking demand from downstream steel industry and steel mills' losses. In a bid to increase control over steel scrap by stabilizing supply and ensuring quality, some powerful steel mills were laying out the steel scrap industry and building an integrated recycling, processing and distribution system. The steel scrap processing industry will confront with a reshuffle.
Plan ahead! Steel scrap processing market sped up adjustment
Processing bases affiliated with steel mills accelerate their expansion to Southwest and South China
•Boasting rich steel scrap, East and North China are still the main targets for processing bases affiliated with steel mills. However, southwest and south China became the main construction areas for steel mills in recent years.
•South China is a region with a larger proportion of EF steel in China, but steel scrap types in the region are mainly domestic steel scrap such as household appliances, and the quality was poor. On the other hand, strict environmental protection management made it difficult for processing bases to survive in South China. Therefore, steel mills in South China were more likely to protect their own steel scrap resources.
•The overall situation in the Southwest was similar to that in South China. At present, there was mainly domestic steel scrap. In addition, steel scrap recycling was more difficult due to the mountainous terrain. However, unlike South China, there were many heavy industrial enterprises in Chongqing, Sichuan, Yunnan and other places, and there were also many untapped steel scrap resources in southwest China, owing to poor steel scrap prices. With rising capacity of EFs and more high-quality steel scrap demand triggered by product transformation of steel mills, steel mills began to deploy steel scrap processing bases in the southwest region.
•China will still be in a balanced-to-tight supply-demand fundamentals for a long time in the next dozen years. Steel mills are also in urgent need of product transformation and green transformation, making high-quality steel scrap the rage at the market. SMM estimates that high-quality steel scrap supply will only maintain a compound annual growth rate of 1% in the next 20 years. In a rapidly changing market, processing companies need to tap more high-quality resources, and at the same time classify ordinary steel scrap into more detailed categories to match customer procurement specifications and procurement plans.
Plan ahead! Steel scrap processing market sped up adjustment
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