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CHINA'S STEEL RECOVERY TO INCREASE SCRAP STEEL USE POST PANDEMIC

STAINLESS STEEL MARKET RECOVERY ​

China’s economy for scrap metal has made a much-needed recovery post-pandemic, as part of their metal-intensive stimulus plan.

With a decline in stainless steel consumption amidst the pandemic last year, the global market for stainless steel production looks to have a surge in growth, with scrap stainless steel to benefit from a scrap metal price increase.

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CHINA'S DOMINANCE IN THE STAINLESS STEEL MARKET

China & Indonesia have increased their global steel developments with their combined share of stainless steel consumption rising from 52% to 64% as of last year.

  • With a massive reliance on nickel, the scrap ratio of stainless steel production has led to 37% in 2020 from 42% as of 2017.
  • As such a predicted increase in scrap metal use in China has pushed them to re-evaluate their carbon emissions & environmental impacts from raw material production, pushing the need for better & greater use of scrap steel, and in turn, increase scrap metal prices.

The stainless steel industry has recovered from the impacts of the pandemic & will continue to lead to nickel demand. The battery market for electric vehicles has become the second-largest user of nickel by a large margin.

GROWTH OF BATTERY SECTOR TO INCREASE DEMAND

Long term growth in the nickel market has come from the battery sector, driven by green energy initiatives with global electric sales doubled since 2020.

  • Global nickel units needed for EV battery production have led to an increase in production by a factor of four or five by 2030!

The market has shown concern with the availability of nickel units due to the huge demand from the battery sector.

SCRAP STAINLESS STEEL PRICE FORECAST

A revival of the European steel demand will follow suit from the collapse of COVID-19. Key factors that influenced this include:

Demand For Ferrous Scrap –

  • Worldwide demand for ferrous scrap metal is expected following an economic ‘bounce-back post-pandemic. China’s willingness to import specific metal grades will be a crucial driver for higher scrap metal prices in global markets.

Reduced Crude Production –

  • China’s 5-year plan is set to cut crude steel production & will focus on a larger capacity for scrap-intensive electric furnaces, which should benefit scrap metal recyclers & the metal industry as a whole.
  • Industry experts have predicted that with China reducing their reliance on iron ore, there will an increase in scrap metal & steel billets to be expected.

China’s demand for scrap steel could jump over 20 million tonnes in 2022, with yearly imports to jump up 10 million tonnes This has not been seen for 10 years. China’s crude steel production is also set to peak next year.

SCRAP STEEL IS A COMMODITY, NOT WASTE!

”What other commodity classified as waste has such a high value? The world has to wake up and put pressure on the European Commission to put on a scrap label. It is not waste.”

– BIR ferrous division president Greg Schnitzer of Sims Metal Management.

With changes to import regulations on scrap metal, certain materials have now been seen as waste.

This has since created an issue of scrap metal such as scrap steel being viewed as a waste division in Europe.

This has since caused many issues with metal recyclers reinforcing the view that scrap is a raw material & needs the credit it deserves.

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