Yan Qiping, general secretary of Chinas Scrap Association, recently offered suggestions for reforming Chinas scrap recycling system, improving the overall processing of scrap and further widening the import of scrap.
Not only is
China the largest iron and steel producer in the world, but it is also the largest consumer and importer of
scrap. Yet,
China lags far behind the rest of the world in terms of average
scrap utilization. In 2004,
China used 199kg of
scrap on average to produce one metric ton of steel, whereas the rest of the world used 450kg of
scrap per metric ton on average.
Crude steel
production via
scrap remelting is regarded as an environmentally friendly process. Some experts say that compared to
production processes relying on
iron ore,
scrap can relay savings of nearly 60 percent in terms of energy and 40 percent in terms of water. Also, air pollution is reduced by 86 percent, water pollution by 76 percent and solid waste by 97 percent.
In 2004,
China consumed 54 million metric tons
scrap, of which 10.23 million metric tons was imported.
Chinas total demand for
scrap in 2005 is expected to be 63 million metric tons, with imported
scrap accounting for nearly 20 percent, or 12 million metric tons.
Estimates peg
Chinas 2006 crude steel output at about 350 million metric tons. At the same time, the demand for
iron ore is expected to exceed 700 million metric tons, and that of
scrap will reach 70 million metric tons. The volume of
scrap produced by steel mills will be around 20 million metric tons, and that of other industries will be 40 million metric tons. Therefore,
China will be lacking some 12 to 14 million metric tons of
scrap.
In 2006, insufficient
scrap and high prices will be characteristic of the Chinese
scrap market. In the first half of next year,
scrap prices are unlikely to see a large increase or decrease range. The prices might fluctuate at the level of late this year. However, the
scrap market will get better as the world steel market picks up. In spite of this,
scrap trading in
China is not seen as profitable.
Addressing this latter point, Yan Qiping, general secretary of
Chinas
Scrap Association, stressed the need for the government to be more proactive in encouraging
scrap usage and
trading. Tax exemptions are but one way of sparking in interest in the
scrap trade, Mr. Yan said. Other suggestions include a standardization of the import market, a repeal of lengthy approval procedures, and closer cooperation with overseas
scrap suppliers.
SteelOrbis Shanghai