China: Ferrous scrap likely to be exempted from the upcoming solid waste imports ban by 2021

The Ministry of Ecology and Environment, China recently announced a sweeping ban on imports of all solid waste products to china completely, from 2021, after putting restriction and import quotas for numerous grades of solid wastes since H2 2019, while in H2 2020, imports of solid wastes will further be limited.

However, it has been reported by reliable sources, that ferrous scrap is likely to be exempted from the said ban by next year.

The authorities are likely to introduce a new set of standards for ferrous scrap imports. From July 2019, import restrictions on various grades of solid waste were put in place following which ferrous scrap import to China fell down sharply, due to stringent import quotas by the government.

Ferrous scrap import in CY'18 was recorded at 1,301,315 t, while in H1 2019 (Jan-June'19) the imports reported at 127,323 t. However, after the restrictions, in H2 2019 (Jul-Dec'19) the imports had fallen to only 28,584 t and this year, in Jan-May'20 China has imported only 7,394 t of ferrous scrap.

Chinese steelmakers have been pushing for an easing of restriction for ferrous scrap import, due to cheaper availability of the same in comparison to domestic Chinese scrap. Currently, domestic HMS (6-10 mm) available in Eastern China is being reported at around $372/t (RMB 2630) DAP basis, significantly more expensive than global HMS prices.

The collaboration of Chinese steel associations such as, China Iron and Steel Association (CISA), China Association of Metal Scrap Utilization (CAMU) and Management Information System (MIS) has requested to eliminate of scrap from the banned list of solid waste, which is likely to get approved by the next year. On an overall basis, China has imported around 3.2 mn t of solid waste during Jan-May'20, down by 45% y-o-y basis.