China's Steel Scrap Imports Experience a Surge in the First Quarter of 2023
China's Steel Scrap Imports Experience a Surge in the First Quarter of 2023

China's Steel Scrap Imports Experience a Surge in the First Quarter of 2023

  • 12-May-2023 4:54 PM
  • Journalist: Rene Swann

China: There has been a significant increase in Steel scrap imports, totalling 166,000 mt in the first quarter of 2023, which marks a 230% YoY increase. This rise in imports can be attributed to the liberalisation of imports of raw materials for secondary Steel since January 1, 2021. However, China has been experiencing low levels of Steel scrap imports due to limited customs commodity codes that correspond to the types of scrap Steel that can be imported. Additionally, the import standards for specification and impurity content are strict, and some details remain unclear.

Despite the liberalization of Steel scrap imports in the last two years, the Chinese market is still limited due to the mixing of various grades of scrap before import, making it challenging for international mainstream scrap types to enter the market. Consequently, the volume of imported Steel scrap has remained at approximately 550,000 mt, significantly lower than that of India and Vietnam, and is likely to remain so.

In 2020, due to the high prices and inability to import Steel scrap, China witnessed a surge in the import of semi-finished products like directly reduced Iron and Steel billets. It imported 3.458 million mt of directly reduced iron, reflecting a remarkable year-on-year growth of 153.3%. Additionally, a combined 18.335 million mt of Steel billets were imported, which was a staggering 499.9% year-on-year increase.

China's Steel industry saw a significant shift in 2021 due to the liberalisation of raw material imports for secondary Steel. Directly reduced iron imports in China declined by 54.9% YoY to approximately 1.3 million mt in 2021. The trend continued in 2022, with imports of directly reduced iron falling by 29.9% to 921,000 mt, which also aligns with the surge in overseas Steel prices during the first half of the year. Looking ahead, domestic Steel consumption is unlikely to see a significant rebound in 2023, and without relaxed scrap import policies, China's scrap import volume is expected to remain stagnant.

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