Posted on 29 Feb 2024
China is expected to see domestic ferrous scrap supply expand more rapidly in coming years as the central government is poised to initiate a campaign encouraging large-scale equipment renewals and replacements of consumer goods, Mysteel Global noted.
At a meeting of China's Central Commission for Financial and Economic Affairs chaired by President Xi Jinping on February 23, it was stressed that the acceleration of equipment upgrading and replacement is an important measure to promote high-quality development in the country, according to a report released by the State Council.
In 2023, there were more than 3 billion home appliances in use in China, with households across the nation owning large quantities of air conditioners, refrigerators and TVs, state media China Daily has reported.
The meeting highlighted the need to encourage the replacement of vehicles and household appliances while promoting large-scale recycling and utilization of waste materials, both of which will require supportive measures jointly formulated by the central and local authorities, according to the report.
"This will undoubtedly lead to a faster increase in China's ferrous scrap supply overall," a market watcher based in Shanghai said.
China's steel scrap supply and demand reached a tight balance last year, Mysteel Global noted. In 2023, China's total steel scrap supply dipped 0.3% on year to 249 million tonnes, while demand had weakened by 0.7% on year to 248.6 million tonnes, Mysteel's survey showed.
"The gloomy property market in China caused the quantity of steel scrap recycled from building sites to decline significantly last year," the Shanghai market watcher explained. "Meanwhile, scrap supply from the machinery and energy sectors also declined due to the slow recovery of downstream demand," he added.
The tight availability of steel scrap has made domestic steel scrap prices more resilient compared with finished steel prices, causing electric-arc-furnace (EAF) steelmakers to frequently suffer losses on steel sales, Mysteel Global noted.
"If the pace of product renewal and replacement can be lifted as expected, China will see major increases in the volume of steel scrap generated from the machinery, household appliances, and automotive industries," the market watcher believed.
This may help ease the cost pressures incurred by domestic EAF steel mills and expand EAF-route steel production, which is in line with China's goals to achieve carbon peak and neutrality in the long run, he noted.
Source:Mysteel Global
