China seeks more scrap

China seeks more scrap

Yan Qiping, general secretary of China’s Scrap Association, recently offered suggestions for reforming China’s 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. China’s 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 China’s 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 China’s 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