China will boost its ferrous scrap consumption by 23pc to 320mn mt over the next four years, according to the country’s National Development and Reform Commission (NDRC).
The country consumed around 260mn mt of ferrous scrap in 2020 and aims to increase this usage to replace the 410mn mt of 62pc iron ore it consumed last year, according to media reports.
Moreover, the country plans to reduce its greenhouse gas emissions to become carbon neutral by 2060. This would mean that Chinese steelmakers would need to shift from blast furnace (BF)- to electric arc furnace (EAF)-based steelmaking. The latter method uses more scrap, which would tie in with the country’s improving demand for ferrous scrap.
A report by Global Energy Monitor (GEM) has stated that the global steel industry may accrue $40-70bn in write-down assets in the long term as more steelmakers opt for the more carbon-efficient form of steelmaking through EAFs.
China, which has an overcapacity of 13.5-20pc based on the total production of 2020, is likely to follow this path, GEM reported, adding that Chinese steel mills using BFs currently comprise 51pc or 1.02bn mt of annual steel production.
The NDRC has also targeted 4mn mt of copper scrap and 11.5mn mt of aluminum in its new plan.