China lifts steel scrap bans to escape Aussie iron ore

Via Reuters:

China is expected to issue new standards for steel scrap at the end of 2020, the official Xinhua news agency reported, in a move that will allow material meeting them to enter the country after a ban on solid waste imports goes into effect.

Beijing currently categorises most scrap metal as solid waste, imports of which will be banned from the end of this year, but has already made some exceptions on the nonferrous side that will allow certain high-grade shipments to continue.

Inflows of steel scrap – which is melted in electric arc furnaces to make recycled metal – into top steel producer China have been dwindling ahead of the ban for environmental reasons, leaving the industry concerned about a shortage of supply.

In January, China published new standards for high-grade copper scrap and aluminium scrap that allowed them into the country. Now, new standards have been proposed for high-quality steel scrap which will be classified as a resource rather than a waste, meaning it will not be subject to the ban.

The steel scrap standards formulated earlier have now passed the review stage and work is being accelerated to publish them at the end of this year, Xinhua reported, citing a meeting on recyclable ferrous materials in Shanghai on Tuesday but without providing further details.

Wen Xuefeng, head of the solid waste department at China’s Ministry of Ecology and Environment, said making full use of domestic and international recycled steel would help reduce emissions and alleviate China’s over-reliance on iron ore, Xinhua reported.

Dalian iron ore prices have risen more than 50% so far this year amid coronavirus-related supply concerns and robust steel demand, squeezing Chinese steel mills’ margins.

This helps explain why scrap output has fallen during the pandemic steel surge:

Expect it to resume its climb next year, another reason to be bearish iron ore before long.

David Llewellyn-Smith
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