China: Ferrous scrap imports increase by over 20% y-o-y in H1CY23

China's ferrous scrap imports rose by 23% during the first half of the calendar year (CY) 2023 (January-June), reaching 123,878 tonnes (t) compared to 100,554 t in the same period of 2022, according to customs data.

Scrap imports increased by 14% m-o-m in June to 18,254 t. This hike in imports can be attributed to the acceleration in construction projects across China, which has led to higher steel scrap demand. It is worth noting that China has more than 700 steel scrap recyclers with a recycling capacity of over 150 mnt/year. As a result, imports are generally low due to significant domestic generation and other metallic sourcing for steelmaking.

China's ferrous scrap imports observed increased by 27% y-o-y compared to June 2022 when imports had been recorded at 14,423 t.

Billet imports: China's billet imports fell sharply by 64% y-o-y to 992,226 t in H1CY23 (Jan-Jun'23) as against 2.77 mnt in the year-ago period. However, import volumes increased by 19% m-o-m to 108,220 t in Jun'23 as against 91,308 t in May.

Country-wise scrap imports:

• Imports from Japan increase: Chinese mills imported 85,404 t of scrap from Japan in H1CY'23, up 23% compared to 69,293 t in H1CY'22. Similarly, imports rose by 12% m-o-m in June, reaching 10,189 t from the previous month's 9,094 t. Although this volume may not appear significant considering China's overall scrap consumption, it reflects a positive trend in imports from Japan.
  
  

• Imports from South Korea stable: China imported 19,104 t of scrap from South Korea in H1CY'23, showing minimal change compared to 19,062 t in H1CY'22. However, imports from South Korea increased by 35% m-o-m in June reaching 3,740 t compared to 2,771 t in May.
  
  

Outlook
Market participants predict that the imported scrap market in China for the second half of 2023 is unlikely to witness a significant expansion. This projection is due to the strict customs checks and the widening spread between domestic and overseas scrap prices, which may deter substantial imports in the latter half of the year.