Choice between scrap and iron ore: Environmental protection become key factor

In the current vigorously promote energy
conservation and recycling economic situation, increase scrap application level
is imperative, however, for requiring high-yielding of domestic enterprises, this
is also greater difficulties. Therefore, to change the status of low
utilization of scrap, it still needs a long process.

At present, China’s steel industry
transformation and upgrading of the two cores – green transformation and
product upgrades are directly related with the consumption of scrap, but last year
to this year, domestic key steel enterprises of scrap consumption was dropped

Data show that in 1-5 months of last year,
China’s overall steel scrap consumption fell 21.7 kg. Among them, BOF steel
scrap consumption decreased 8.8 kg more than last year, EAF steel scrap
consumption fell 117.6 kg.

Meanwhile, China’s total consumption of
scrap also shows a downward trend. Statistics show that in 2012 China consumed
84 million tons of scrap steel, compared with 2011 year of 9100 tons, reducing
by 700 million tons.

In this regard, experts said this is mainly
due to steel prices continued to slump, scrap costs are high, as well as controllability
of steel scrap is poor etc. factors affected. In which the cost of scrap higher
than iron is the root cause of low scrap consumption.

In the international market, for example,
although iron ore prices experienced several price increases, which has be more
than 100 dollars / ton of price, and 1.67 tons of iron ore can produce one ton
of steel, but compared with 400 dollars / ton of the scrap price, 1.67 tons of
iron ore price is very low.

Experts point up that even adding iron ore steelmaking
of consuming energy costs, it still not enough to make up the difference price with
scrap, moreover, Iron ore of thermal utilization and recovery can¡¯t be ignored.

It is worth mentioning that another major
reason resulting domestic scrap ratio is not high, that is environmentally
illegal low cost. Because domestic environmental protection has insufficient
attention, illegal cost is low and causing law-abiding at a disadvantage. In
contrast, because of stringent foreign environmental system, scrap as energy
saving materials is more likely to be favored than iron ore.

In addition, the high scrap import taxes
and stringent environmental protection system, also to some extent dampened the
enthusiasm of buyers, resulting in insufficient supply of raw materials, eventually
had to abandon reliance on scrap and turning to iron ore. However, with the national
importance of environmental protection and the increase in volume of output, scrap
iron will also be favored by steel enterprises.

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