China's MIIT approves more steel scrap suppliers

China's Ministry of Industry and Information Technology (MIIT), the country's governing body for industry sectors, has bolstered the number of its approved steel scrap suppliers nationally by a further 101, according to a MIIT statement on January 21.

The newly-added 101 steel scrap collecting and recycling enterprises represent the eighth batch whose operations meet with MIIT's approval and, like those similarly recognized by the ministry previously, can enjoy preferential policy benefits such as substantial refunds of up to 30% on their VAT payments, Mysteel Global notes.

Since 2013, China has released seven lists of qualified steel scrap suppliers totalling 379 in number, as reported, so those newly recognised now take the total to 480. However, in its January 21 announcement the ministry said it had also disqualified two steel scrap companies this time, leaving the number at 478.

Significantly, the ministry's announcement of newly-approved scrap enterprises came just weeks after new standards for the steel scrap industry were adopted by China's central government effective January 1, which also removed most of the restrictions on scrap imports that had hindered this trade since 2018, as Mysteel Global reported.

With the rules covering China steel scrap sector finally getting some long-awaited clarity, it could have been expected that the number of enterprises approved for 2021 might be larger than last year but, in fact, this year's is only two-thirds the total in the seventh for 2020 of 148 enterprises, Mysteel Global notes.

Industry insiders explain this anomaly by pointing out that those steel scrap collecting and processing companies seeking MIIT approval would have had to apply months ago, when details relating to the new standard of recycling "iron-steel" materials were far from clear and when liberalizing imports was also largely a distant hope. As the scrap firms had no clear idea of how severe the new standard might be, fewer chose to begin the process of applying, they said.

Now that the new standards have been introduced, more scrap suppliers may seek qualification this year for MIIT for 2022, Mysteel Global predicted. "And with more scrap suppliers approved by MIIT, China's steel scrap market will become more large, stable and more rational," a Shanghai-based market watcher said.

In order to receive MIIT certification, scrap collectors and recycling firms must ensure that their scrap-processing capacity is above 150,000 t/y and whose factory areas are no smaller than 30,000 square meters. Moreover, they should host fully sustainable resource-processing facilities, such as scrap metal balers, shears and shredders boasting higher efficiency and lower energy-consumption, Mysteel Global noted.

"Through encouraging the building of more large-sized regional steel scrap processing and delivering centres, China's steel industry will be provided with more scrap resources and of good quality to satisfy its needs in coming decades," she added.

For example, domestic steel scrap supply this year is likely to rise to 280 million tonnes, up 7.7% on year, according to Mysteel's estimation.

Written by Lindsey Liu, liulingxian@mysteel.com

This article has been published under an article exchange agreement between Mysteel Global and SteelMint.