China stresses on scrap usage, EAF route

China's rising scrap usage must be supported by the development of the electric arc furnace route of steel-making. The CY'21 national steel scrap conference and the second council meeting of the 7th China Scrap Metal Utilisation Association were held in Nanning, Guangxi on 28 Dec'21.

The conference stressed on promoting generation, growth, and healthy development of steel scrap and the EAF steel industry.

Luo Tiejun, vice-president of China Iron and Steel Industry Association (CISA), had two key recommendations.

The first one was related to tax. He said: "We should solve the scrap tax problem as soon as possible and straighten out the upstream and downstream sectors; explore favourable policies on VAT for imported recycling steel materials." As per the second proposal, he said, "There should be a shift to the short route to foster favourable conditions for development of EAF steel."

There was a focus on the overall utilization level of scrap, which needs to be enhanced, officials said. Inadequate scrap processing facilities, the high tax burden on scrap, and the urgent need to standardize tax policies were the other issues discussed.

China's scrap imports resume in CY'21 China recorded a massive jump of 2080% in imports of recycled steel raw materials or ferrous scrap in Jan-Nov'21. The world's leading steel producer imported 4,78,281 tonnes (t) of ferrous scrap in this period as compared to 21,936 t in the same period last year (Jan-Nov'20), as per customs data maintained with SteelMint.

On 31 Dec'20, China's Ministry of Industry and Information Technology jointly issued a notice to confirm the duty-free imports of recycled raw material for steelmaking with effect from 1 Jan'21. This move was taken to encourage steelmakers to import recycled steel raw materials and promote the high-quality development of the country's steel industry. Following this, scrap imports in China have resumed this year, increasing sharply y-o-y. However, the volumes have been still lower than expected.

Baowu eyes 50% scrap usage as green agenda gains momentum: The Baowu Group, the world's largest steel manufacturer, recently said its electric arc furnace (EAF) steel output accounted for only 6.5% of its total crude steel output of 115 million tonnes (mn t) in CY'20, a key reason why decarbonising its blast furnaces and converter routes was so crucial to it. The group aims to eventually boost scrap consumption to 50% in its converters, as per a report.

China's ferrous scrap generation could touch 340 mn t by CY'25 and more than 400 mn t by CY'30, an increase of more than 1.5 times compared to CY'20, as per the State-run think-thank, Chinese National Institute of Metallurgy.