Signs Point to Healthy Near-Term Scrap Demand

Speaking to delegates of the 4th China International Metal Recycling Conference, Chi Jingdong of the China Iron & Steel Association said China will likely phase in more electric arc furnace (EAF) steelmaking after its own scrap reservoir becomes more available.

Chi noted that the recent intense growth in China’s steel industry has been largely reliant on imported iron ore and (to a lesser extent) imported ferrous scrap.

In the rapid growth years of Chinese steel production from 2001 to 2008, said Chi, China’s basic oxygen furnace (BOF) steelmaking capacity grew by 320 million metric tons, while EAF steelmaking grew by just 39 million tons.

Securing adequate electrical power to run an EAF mill can sometimes be a problem, said Chi. He said the government is aware, however, that the EAF steelmaking process is more energy-efficient than the multi-step BOF process. “The use of scrap will induce a very heavy influence on the lessening of energy consumption,” he commented.

Likewise, EAF steelmaking can ultimately help China’s steel industry reduce its carbon emissions. “The CO2 emission will be much less [in EAF steelmaking] than in the long process where iron ore and coking coal are used,” said Chi.

China’s barrier to more EAF steelmaking, said Chi, is its limited scrap supply. “China has a relatively lower accumulation of steel [compared to Western nations] and thus is short of scrap supplies,” said Chi. “Meanwhile, most of the steel products in China are used in construction and buildings with long service life. It takes at least 30 to 50 years to get scrap from this application.”

Because of the lack of scrap, BOF steelmakers in China use less scrap as feedstock (less than 10 percent) than many of their counterparts in other parts of the world, said Chi. Only as China’s available scrap reservoir grows is that percentage likely to rise, Chi speculated.

Chi estimated that even without a switch to more EAF steelmaking, China’s steel producers will continue to need 110 million tons of ferrous scrap per year at the present steel production figure. “But at present, [domestically] generated scrap totals only 80 million tons. There is a large shortage.”

The 4th China International Metal Recycling Conference, organized by the Metallurgical Council of the China Council for the Promotion of International Trade (MC-CCPIT), was held May 13-14, 2011, in Guangzhou, China.