China enters ferrous scrap export era

China’s national news service, citing data from the state-affiliated China Iron and Steel Association (CISA), has reported the nation exported 2.2 million metric tons of ferrous scrap in 2017. The figure marks an exponential increase from the mere 1,000 metric tons exported in 2016.

According to the CISA data, the largest recipients of the exported ferrous scrap were ASEAN (Association of Southeast Asian Nations) countries such as Indonesia, Thailand and Vietnam.

The leap in exports occurred despite a 40 percent export tariff on ferrous scrap that was in place throughout 2017, according to the Xinhua news service online article.

The change in China’s ferrous scrap balance has been created both by its much larger generation of ferrous scrap compared to previous years and the government’s effort to shut down scrap-melting induction furnace operators.

According to Xinhua, the government’s effort to extinguish that sector resulted in the phase out of as much as 140 million tons per year of scrap-fed melt shop capacity. Anti-pollution efforts have been the reason for the shutdowns, according to the government. Some analysts, however, cite favoritism toward state-owned steelmaking firms as the reason the induction furnace sector was targeted.

Ferrous scrap traders in other parts of the world have been monitoring what some contended would be China’s inevitable switch to a ferrous scrap exporter, with some predicting a major influx of newly exported scrap hitting the global market by the end of the decade.

The Xinhua news agency report indicates the scrap exported in 2017 was shipped from several of China’s coastal provinces, including Guangdong, Jiangsu, Zhejiang, Fujian and Hainan provinces.