China’s scraptastrophe builds

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Bloomie has a little coverage the Chinese steel scraptastrophe today:

With tighter emission limits, improved furnace technology and output curbs, mills are using more scrap than ever before, according to Goh Kian Guan, chief investment officer at recycler Chiho Environmental Group Ltd. If a steelmaker is causing too much pollution, “there’ll be a chance they will be shut down, or asked to reduce production,” Goh said in an interview from Shanghai.

“They are very careful,” Chiho’s Goh said, referring to mainland mills. “They play by the book and try to comply.” And as steelmakers outside China are also using more scrap to avoid carbon taxes, he expects the global market will tip to use more scrap, instead of iron ore, in 2020.

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About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.