Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

China’s 14th five-year plan for 2021-25, drafted in a meeting held from Oct 26-29, has put emphasis on the development of new technologies and environmental goals. 

Standardization was the key to the development of China’s steel industry in the 13th five-year plan (2016-20).

China Iron and Steel Association believes the industry should endeavour to build systemic standards on those aspects to achieve high-quality and green development.  

The Chinese steel industry removed 200mn mt per year of excess capacity and upgraded 610mn mt per year of capacity for ultra-low emissions during the 13th five-year plan. China’s carbon emissions per unit of GDP in 2019 decreased by 18pc since 2015 and by 48pc since 2005, a year ahead of target.

As per the ecology and environment ministry, 228 steel companies have upgraded to ultra-low carbon emission standards and among them, 82 steel enterprises with 330mn mt per year capacity are under supervision.  

In line with this, China Metallurgical Industry Planning and Research Institute emphasized on quality development of the steel industry centered around technological innovation.


Where does ferrous scrap fit in?

China needs to expand its scrap recycling supply chain and open the window for scrap imports to achieve its carbon targets in the 14th five-year plan. China has already given the green signal for scrap imports in 2021.  


As a long term goal, the country wants to become carbon neutral by 2060 and is aiming for its CO2 emissions to peak before 2030. Mills may have to increase costs to upgrade as a reduced carbon footprint will require a shift away from blast furnace-based mills to electric arc furnaces (EAFs) that recycles steel scrap.  


Total Chinese crude steel capacity is expected to rise 15mn mt in 2020 and by 40mn mt in 2021 from around 1240mn mt in 2019. EAF steelmaking capacity will reach 185mn mt per year by end 2020 and 195-200mn mt per year by end 2021. This will push scrap ratio in Chinese converters to as high as 20pc-30pc, giving a boost to ferrous scrap consumption to rise above 220mn mt mark in 2021.

Leave a Reply

Your email address will not be published.