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China’s ferrous forecast: scrap demand will continue to rise

Asia – For the Chinese government to reach its ‘Green Development Targets’ for the domestic steel industry over the coming years, the country could well need to import more than 30 million tonnes of ferrous scrap per annum, it has been estimated by Metal Bulletin Research. This would compare to the meagre 2 million tonnes imported into China in 2015.

Up to 220 kg of scrap must be used for every tonne of steel produced in the country by 2020, whereas calculations by the China Association of Metal Scrap Utilisation suggest the scrap usage average was as low as 104 kg per tonne in 2015, according to an article in the April edition of Metal Bulletin Magazine. Although the target appears ambitious, it adds, ‘we can be sure that the demand for scrap will continue to rise over the next few years’.

It is also reported that Chinese ferrous scrap purchases from the USA surged 367% year on year in the opening month of 2017 to almost 68 000 tonnes.

There was a decline in steel scrap usage for crude steel production across most of the key countries and regions of the world in January-September last year, the Bureau of International Recycling has stated. But China increased its steel scrap usage by 3.5% to 64.7 million tonnes to outstrip its gain in crude steel production.

In contrast, the nation made cuts in its scrap imports (-14.4% to 1.53 million tonnes) during that period.

China’s iron ore imports of 83.49 million tonnes in February outstripped incoming volumes for the same month in 2016 by more than 13%, or almost 10 million tonnes; the year-to-date import total was over 12% higher at more than 175 million tonnes.

Whereas China’s iron ore imports climbed 7.5% last year to 1.024 billion tonnes, domestic output of the steelmaking raw material dropped 3% in 2016 to 1.28 billion tonnes, according to the National Bureau of Statistics.

Read our ferrous market analysis "Prices rebound again" here to catch up on the most important developments.

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