China's rising scrap usage to boost profits of scrap yards
All the Chinese steel scrapyards that have persevered despite all the hardships in the past years must have been generously rewarded now that steel scrap has become a ste...
All the Chinese steel scrapyards that have persevered despite all the hardships in the past years must have been generously rewarded now that steel scrap has become a steelmaking raw material with promises and prices have been strengthening consistently in the past couple of years.
The memory is still fresh about a steel scrap conference in Beijing around 2008-2009 when almost all the scrap producers had been grudging loudly about the razor-thin margins or losses, the heavy burden of taxes and fees, and the unfair competition by some scrap sellers with below-the-market prices via VAT evasion.
About a decade later, they have been enjoying fat profits even though the reform in taxes and fees in the scrap industry has been progressing slowly, as the drastic difference as of today against 2008-2009 lie in the robust demand from the Chinese steelmakers on the country's greater emphasis on environmental protection including carbon emission.
Back in 2008-2009, steel scrap price in China hovered around Yuan 2,000-2,200/tonne ($314.5-346/t), while now it has surged to around Yuan 3,600-3,700/t, both including the VAT, and China's steel scrap consumption in steelmaking has been growing gradually and steadily at about 20 million tonnes/year for the past few years to about 230 million tonnes by 2021.
Even brighter future in the coming years can be foreseen too now that Beijing has set explicit targets for scrap utilization in steelmaking until 2025, aiming to increase scrap use in steelmaking to at least 300 million tonnes and to raise the contribution of the electric-arc-furnace (EAF) steel mills in the country's steel output to 15%.
The blooming period will probably go beyond 2025 for the recycling industry in general including steel scrap, as China is on the path of carbon emission peak by 2030 and carbon neutral by 2060, and steel industry, as the country's second largest carbon emitter after the power industry, has been on the frontline of all the related measures.
Written by Hongmei Li, li.hongmei@mysteel.com
This article has been published under an exchange agreement between MySteel Global and SteelMint.
