China’s consumption of scrap steel has declined in the past two years, but despite this the country is looking to change its steelmaking industry to a greener one.

The average consumption of steel scrap used per tonne crude produced has fallen by 21.7 kg year on year in January to May, 2013. In 2012, China consumed 84Mt of scrap steel, 7Mt less than in 2011.

Hu Xiaofeng, head of Zenith scrap steel business, attributes the drop in scrap consumption to its higher costs. Scrap prices currently stands at around $400/t on the global market while iron ore prices now remain above USD 100/t after years of continuous price increases

Theoretically, 100% of steel can be recovered from scrap while on average 1.67t of iron ore is required per tonne of iron produced. But, according to Hu Xiaofeng this is still cheaper than using scrap and iron from ore also generates by-products such as coal gas, coke breeze and granulated slag.

Hu added, “The punishment for breaking environmental protection laws in China is not as severe as in many western countries. So the Chinese steelmakers lack the motivation to use a greener raw material,”. Also, the high tax and complicated import regulations on steel scrap deter the buyers’ enthusiasm to import the product.

Source: China Metals e-mail