China Backs Away from Stainless Scrap in 2010

Mills in China produced as much stainless steel in 2010 as they did the two previous years, but they did so while using much less imported stainless steel scrap.

In a presentation at the China International Recycling Conference 2011, Li Cheng of Shanghai Zhonghe Metal Processing Corp. Ltd. provided a range figures portraying China’s stainless steel production trends, including its use of raw material feedstock.

China’s stainless steel production has grown from 5.3 million tons in 2006 to 9.5 million tons in 2010. Li estimated that China’s output will continue to grow, reaching 14 million tons in 2014.

China’s economy has been consuming about the same amount of stainless steel each year from 2006 to 2010. This, to some extent, is creating a “reserve of stainless steel,” said Li, which will be “an important source of stainless scrap.”

Li characterized the demand for stainless steel scrap in China as “strong,” adding, “as a recycled material, the demand for stainless steel scrap will grow in the future years and be applied as a basic material to multiple industries.”

However, said Li, the high price of nickel on the London Metal Exchange (LME) has caused the price of stainless steel scrap to rise around the world, making it an expensive commodity for Chinese stainless steel producers.

While these producers were willing to import more than 380,000 tons of stainless scrap in 2007 and again in 2009, as prices rose in 2010 they backed away from imported scrap purchases, bringing in a mere 94,000 tons of stainless scrap.

The most common substitute feedstock while scrap has been on the sidelines has been nickel pig iron from a “red soil nickel mine” that started production in China in 2006, according to Li. “Nickel pig iron contributed to half of the total metal [feedstock for stainless steel] in China in 2010,” he stated.

The China International Recycling Conference 2011, hosted by the China National Resources Recycling Association, took place May 13-14 in Foshan, China.