STEEL NEWS

China lifts import ban on scrap metal, reducing dependence on iron ore imports

According to The Australian, China quietly lifted a two-year ban on scrap imports, in line with a long-term strategy to reduce its dependence on Australian iron ore.

Some economists say the move is an important factor in Beijing's plan to reduce its dependence on Australian imports for steel production. Others see the shift as more symbolic, at least to begin with, although it is also consistent with China's determination to change the way steel is made.

CISA confirmed that 3,000 tons of processed steel raw materials were imported to China from Japan at the end of January. It was the first import of ferrous scrap used for steel production in the domestic market, since China banned the processing of raw steel two years ago

While analysts said it will be a long time before scrap makes a significant contribution to the amount of iron ore needed to make the steel needed to fuel China's infrastructure spending boom, it was another element in Beijing's efforts to diversify away from trade with Australia.

China wants to cut carbon emissions by making more steel from recycled metal rather than raw materials like iron ore.

Oxford Economics reported that China, which wants to achieve zero net emissions by 2060, plans to reduce its steel industry emissions by 20% over the next five years.

He also asked factories to increase their use of electric arc furnaces from 10% of total steel production to over 20% by 2025. Currently, 90% of factories in China operate with blast furnaces, which use iron ore to make steel.

“With China accounting for more than half of the world's steel production and more than two-thirds of the iron ore imported by sea, this will slow the growth in demand for iron ore,” said Stephen Hare, an economist at Oxford Economics.

China is known to have relaxed its ban on imports of scrap metal effective January 1 this year, reclassifying recycled steel as non-solid waste, which means it can be freely imported.

Jiang Wei, deputy secretary of CISA, said the first order from Japan would open the door for large-scale processing of raw steel in China.

“This is essential to mitigate the current irrational rises in domestic iron ore prices, rising domestic scrap prices and the large gap in the scrap market,” said Mr. Jiang.

Other analysts are more skeptical, arguing that initial scrap imports will not affect China's demand for iron ore.