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Ferrous scrap: China’s usage gathers pace in 2017

Asia – The outlook ‘€˜remains positive’€™ for steel scrap in 2018, insists the BIR ferrous division’€™s interim president Tom Bird of Chiho Environmental Group. Writing in the world recycling organisation’€™s latest divisional Mirror report, he points to expectations of improving steel demand in the USA, ‘€˜positive sentiment’€™ in the EU and ‘€˜underlying strength’€™ in the key Turkish market.

The Mirror also confirms that India purchased ‘three or four bulk cargoes’ early in the year after ‘a gap of many months’ while Pakistan and Bangladesh ‘will have substantial steel capacities coming on stream later this year’.

This leads to a prediction that the Indian subcontinent will import up to 12 million tonnes of ferrous scrap in 2018. In his review of latest data, statistics advisor Rolf Willeke identifies China as the world’s biggest steel scrap user in 2017, with its usage soaring more than 64% year on year to 147.9 million tonnes.

‘The reason for this sharp increase is that the Chinese government instructed BOF mills to increase their scrap consumption from 11% to 20%; it has been heard that this obligation might be increased to 30%,’ Willeke explains. ‘In addition, many new EAFs are being installed or are in the pipeline for the near future.’

According to Scott Newell, chairman of the BIR’s shredder committee, China’s annual EAF capacity could reach 120 million tonnes within two or three years.

In the first nine months of 2017, Willeke also reports, there were sizeable increases too in steel scrap usage for crude steel production in the EU-28 (+5.9% to 69.892 million tonnes), the USA (+3.4% to 36.2 million tonnes), Russia (+8.2% to 31.4 million tonnes), Japan (+8% to 26.547 million tonnes), the Republic of Korea (+10.8% to 22.681 million tonnes) and Turkey (+17.7% to 23.214 million tonnes).

When compared to the first three quarters of 2016, last year’s January-September period saw leading importer Turkey increase its overseas purchases of steel scrap by 15.6% to 14.932 million tonnes.

The EU-28 remained the world’s leading steel scrap exporter over the same period, with its overseas shipments jumping 18.4% year on year to 15.032 million tonnes.

In the Mirror’s analysis of latest developments in the European market, more demand is noted for bulk scrap cargoes from countries in South East Asia although, in general, the freight costs still place Turkey at a competitive advantage.

In the USA, meanwhile, scrap prices have been boosted by impaired flows as a result of winter weather and transportation backlogs.

And in Japan, where domestic ferrous scrap consumption climbed 7% to 35.763 million tonnes but export volumes fell 5.6% to 8.2 million tonnes, demand for scrap is expected to increase this year ‘owing to a steady steel market and the anticipated rise in crude steel production’.

This article is based on the latest ferrous Mirror produced by the BIR world recycling organisation for the benefit of its members.

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