China eyes 30% scrap ratio by CY'25

China has announced its "14th Five-Year Plan" (2021-2025) for the ferrous scrap industry, the first in the Communist Party's centenary year. The Plan aims to achieve the "two centenary" goals, of "high-quality development", "adhering to the new development concepts of innovation, environment, openness, and sharing". The Plan focuses on, amongst other aspects, reaching a scrap ratio of 30%, and developing a scrap index and futures.

The Plan says the ferrous scrap industry must seize the "two centenary" development opportunities, make good use of both domestic and foreign markets. It should promote the integration of scrap processing and steel slag, taking advantage of industrial upgrading.

On 15 Sept'21, a meeting of the China Scrap Steel Application Association reviewed and approved the "14th Five-Year Plan.

Highlights of the "14th Five-Year Plan"

1. Continuously increase the proportion of scrap and by end of the "14th Five-Year Plan", the national steelmaking scrap ratio will reach 30%.

2. The annual processing capacity of scrap iron will reach 200 mn t.

3. Formulate energy-saving, environmental protection and quality standards for scrap processing.

4. Strengthen training in the scrap industry, enhance, futures-related knowledge, encourage enterprises to use financial tools to avoid risks, and promote the smooth operation of scrap steel futures;

5. Design and develop scrap price index to guide spot market pricing.

6. Promote efficient utilisation of metallurgical slag, and gradually achieve zero discharge of the same.

Infra boost to economy

During the Plan period, the country will still use infrastructure as a strategic measure to boost the economy. It is expected that the demand for infrastructure steel will remain and consumption of high value-added steel will increase.

Ferrous scrap can replace iron ore, and thus development of this strategic industry is vital to the transformation of China's iron and steel industry, It can boost energy conservation, lead to emission reduction, and high-quality steel development.

The "14th Five-Year Plan" for ferrous scrap has important strategies for developing green steel, saving primary resources, reducing energy consumption and solid waste emissions, promoting the development of short-process electric furnace steelmaking, and achieving ultra-low emissions.

Ferrous scrap consumption

In 2020, China's total ferrous scrap resources reached 260 million tonnes (mn t), of which 233 mn t would have been consumed for steelmaking, 20 mn t consumed by the foundry industry, and 8 mn t are in stock. The scrap ratio for steelmaking throughout the year was 21.8%, reaching the highest level in recent years. In the first three quarters of 2018, the total amount of scrap consumed by steelmaking in the country has exceeded 140 mn t, with a scrap ratio exceeding 20%.