BIR: China’s policy shift aimed at cutting carbon emissions to drive up global scrap prices

BIR: China’s policy shift aimed at cutting carbon emissions to drive up global scrap prices

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At the latest World Recycling Convention of Bureau of International Recycling (BIR) held online on June 1, the participants commented on China’s 14th Five-Year Plan, which aims to cut domestic crude steel production capacity and boost the use of scrap-intensive electric arc furnaces.

Jiak Lim, senior trader at Singapore-based Zhejiang Metals and Materials, stated that the reason why Japan and also South Korea have emerged as leading scrap suppliers to China is the relatively short lead time involved. He stated that the choice of Japan has also been influenced by the fact that many of its large companies have established offices in China. He advised prospective exporters to China to focus initially on P&S and shredded scrap in 20-foot containers for ease of conforming to the country’s import specification requirements. Jiak Lim added that China’s policies aimed at reducing carbon emissions will drive up scrap prices globally.

China’s scrap demand is expected to rise by a further 20 million mt in 2021 and some experts suggest that the country’s annual imports could increase to around 10 million mt.

Meanwhile, Tom Knippel of SA Recycling in the US and Denis Reuter of TSR Recycling GmbH & Co. KG in Germany stated that the US and Europe’s prime scrap production has decreased significantly, as a result of production issues in the automotive sector. Regarding the concerns over the proposed changes to EU shipment regulations, Mr. Reuter stated that it would potentially limit exports of materials designated as “waste” only to those facilities which operated in broad accordance with the EU’s health and environmental standards, saying, “I do not think it will be realistic that we will see a total ban on exports from the EU.” Gregory Schnitzer, BIR Ferrous Division’s president, said that the root of the problem was that steel scrap fell under the “waste” definition in Europe, when in fact it is a recycled raw material.

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