The China Association of Metal Scrap Utilization (CAMU) and a group of unspecified steel mills have lobbied the central government to remove ferrous scrap from the list of banned solid waste imports in 2020.
Import volumes of ferrous and some nonferrous products, depending on quotas, have fallen to almost zero since the introduction of the blanket ban on solid waste products on July 1, which, according to a presentation given by the vice secretary general of CAMU on Dec 13, was based on misinformation.
Import restrictions, particularly for ferrous scrap, have driven domestic prices well above the costs of hot metal production; making local basic oxygen furnace (BOF) steelmakers significantly more competitive than their electric arc furnace (EAF) counterparts producing the same steel products.
In fact, CAMU claims that EAF steelmaking costs average rmb300-500/t ($42.96-71.61/t) higher than BOF steelmakers in China, whereas they stated that EAF mills’ costs should be rmb200-300/t lower than the latter to ensure competitiveness and “survival” for these “minority” producers.
According to preliminary statistics presented by CAMU, domestic BOFs consumed 168kg of ferrous scrap per tonne of liquid steel (kg/tls) produced in 2019 while EAFs used approximately 654kg/tls over the same period.
Based on these parameters, Davis Index calculates EAF steelmaking raw materials production costs (including 13pc VAT, excluding power charges) currently stand at rmb2,449/t compared with rmb2,224/t at their BOF counterparts – a difference of rmb225/t.
(US$1=rmb6.98 as on Dec 16, 2019)