China holds tremendous potential in its steel scrap reserves, estimated to total around 471 million tonnes in 2016. According to the China Iron & Steel Association (CISA) and its member companies, China had a total reserve of ferrous scraps of about 557 million tonnes. About 86 percent of the total steel scrap reserve was mixtures of ferrous metals, ingots and rolled products.
The total steel scrap reserve can only be used if it is commercially viable. All of this waste material is simply a result of steel production over the years, accumulating slowly and without being recovered or processed. As a result, it has remained largely unutilized as a raw material source.
As Chinas demand for steel continues to surge, however, its total steel scrap reserve has been slowly reduced. Steel production in China increased by 11 percent in the first half of 2016, compared to the same period in 2015. As Chinas economy continues to grow, this trend is set to continue.
China has now implemented a number of measures to promote scrap steel recycling, including subsidies for scrap metal processing, improved relevant legislation and raising scrap awareness among steel producers. A new policy was introduced in late 2016, enforcing scrap steel trade certificate requests for all imports and exports in China.
These measures have already started to pay off, with the recycling rate of steel scrap increasing steadily over the past several years. In 2015, it was reported that the steel scrap recycling rate in China had reached as high as 66 percent. For comparison, the steel scrap recycling rate in Europe is lower, at around 50 percent.
In order to meet its ambitious recycling plans, China recently passed a new policy which states that 70 percent of the total steel scrap reserve will be used for recycling by 2020. This policy is expected to have a significant impact on the scrap industry in China, as there is still a large amount of scrap steel which needs to be recycled in order to meet the 70 percent target.
Although the total steel scrap reserve in China has been slowly reduced in recent years, it still holds tremendous potential as a raw material for steel production. Assuming that the current policies remain in effect, and that the current steel production trends continue to increase, China is expected to make significant gains in steel scrap recycling over the next few years. This could lead to an increase in the overall availability of scrap steel, and therefore make it a more attractive option for steel manufacturers worldwide.
