Chinese Scrap Export Slows Down but Still Alive - Reports

Much hyped ferrous scrap exports from China has slowed down in last few weeks but has not stopped. Small quantities are still getting exported and market experts feel it will continue.

China's ferrous scrap exports were triggered by Chinese government's order to eliminate small induction furnaces by the end of June in which were the major consumers of scrap as raw material. According to industry estimates, these furnaces used to produce about 40-45 MnT of steel and was consuming about 55-60 MnT of scrap.

Local Chinese traders feel that  rising scrap prices in domestic market has slowed down the exports of scrap. But scope of it getting exported from China in big way can not be ruled out.

"At the moment, steel scrap export from China attracts an export tax of 40%. Due to ban on mid frequency induction furnace, suddenly supply of scrap has increased in domestic market and has led to exports.

Although with rising steel prices in domestic market, lot of Chinese mills have raised their scrap feed in steel-making. This has led to increase in domestic scrap prices and reduced export parity", said a local trader based in China.

Last offers for LMS scrap from China are assessed at around USD 250-255/MT CFR South East Asia and about USD 260-265/MT CFR South Asian countries. Busheling scrap at around USD 310-315/MT CFR levels.

Rising importance of scrap in China

There are several reports which highlights,how scrap is gaining importance in China.

According to China Association of Metal Scrap Utilization (CAMU), Chinese scrap generation may touch 200 MnT in 2020 from a current level of 95-100 MnT. 

It is also expected that Chinese steel mills will increase their scrap consumption to 20% in steel making from a current level of 12-13%.

For almost 15 years, bulk of the scrap volume came from home and prompt scrap which was increasingly generated during steel making and downstream manufacturing process. Trends indicate that China has already entered the infrastructure and product replacement phase; this is exemplified by the increasing percentage of obsolete scrap in the scrap mix.