Posted on 21 Dec 2020
A brief statement headed ‘Recycling iron-steel materials’ published on the website of China’s National Public Service Platform for Standards Information confirms that the much-awaited introduction of new classification standards for the country’s steel scrap sector will take place on January 1, 2021. News of the December 14 statement only filtered down to Chinese scrap dealers and steelmakers on Thursday after China’s Xinhua News Agency carried a short report.
In late November, Chinese government and industry bodies including the Ministry of Ecology and Environment (MEE) and China Iron & Steel Association had finally approved the new standards which classify categories of steel scrap and are comparable to those in use internationally, as Mysteel Global reported, paving the way for China to re-open its ports to approved types of foreign steel scrap.
Quoting CISA officials, Xinhua reported that once the new standards take effect, they will help to maximize the usage of both international and domestic steel scrap resources, and to some extent, limit the continuous surge in iron ore prices.
For now, details such as the number of scrap grades and grade specifications remain unknown. According to an official with industry grouping, the China Association of Metalscrap Utilization, details will not be disclosed until MEE releases the final official announcement to the public. However, he told Mysteel Global this might occur as soon as within the coming few days.
But market participants caution against attaching too much significance to the launch of the new standards, despite it being several years in the making. “Even though China will be lifting the restrictions on steel scrap imports, the impact on the domestic steel market or on iron ore prices will be so small as be ignored,” a market analyst based in Beijing warned, arguing that compared to the volume of iron ore which China imports or to domestic scrap supply currently, even if scrap imports soar to 20-25 million tonne/year, they will still be too marginal.
“And at the beginning in any case, scrap import volumes cannot increase too much,” he told Mysteel Global.
A steel mill official in East China’s Jiangsu province was similarly guarded, saying that being too optimistic about China’s re-opening of scrap imports would be unwise.
“In the past, we hoped that by importing, we would capitalize on cheaper scrap materials but recently, steel scrap prices in the global market have surpassed prices in our domestic market due to the recovery in steelmakers’ demand and limited scrap availability. Considering this, we really have no idea how the easing of restrictions might unfold, in practical terms,” he commented.
As of December 16, China’s spot transaction price of the 6-8mm common-grade carbon steel scrap in Zhangjiagang in Jiangsu reached Yuan 2,600/tonne ($377.8/t) excluding the 13% VAT. As of the same day, Turkey’s market for imported steel scrap had refreshed its 6.5 year high of $412/t CFR, Mysteel’s data shows.
Written by Lindsey Liu, liulingxian@mysteel.com
Edited by Russ McCulloch, russ.mcculloch@mysteel.com
Source:Mysteel Global
