Chinese official departments are promoting the implementation of new and looser scrap steel (recycled steel raw material) import standards to promote an increase in scrap imports.

According to a draft published by the China Metallurgical Information and Standards Institute (CMISI) on the Metal Standardization Internet, the new scrap steel import standards will allow the import of mixed materials and lower import inspection standards. The standard could be updated in 2024, Kallanish notes.

Specifically, the new standards increase the types of imported scrap steel, allowing the import of scrap steel with a thickness of less than 2mm, such as scrapped small equipment, and scrapped small steel structural parts. The revised standard adds small scrap steel grade LRS304, which is expected to allow imports of H2 grade with similar specifications.

In addition, the new standards also allow different grades of scrap steel to be mixed and imported, which means that China's scrap steel import trading will be in line with conventional international standards, allowing more international scrap steel supplies to enter the Chinese market. Prior to this, imports of mixed scrap were not allowed.

CMISI also adjusted the impurity inclusion requirements for imported scrap steel from three categories: "0.3%, 0.8%, and 1%" to "1.0%, 1.5%, and 2%." The minimum inspection quantity for each imported cargo has also been reduced from 300 tonnes to 30t. These two modifications are also intended to encourage more scrap steel to enter the Chinese market.

CMISI explained in its proposal that China encourages the development of electric arc furnaces to reduce emissions from the steel industry, so relaxing scrap import standards is expected to increase scrap supply, thereby promoting the high-quality development of the steel industry.

However, practitioners in China's scrap steel market are conservative about whether the new standards can bring about a surge in import volumes. On the one hand, the implementation of the new standards will take time, and so this could have a limited impact on scrap imports this year. Secondly, China's local scrap steel prices are sometimes lower than international scrap steel prices (after including Chinese VAT).

China resumed imports of scrap steel starting in 2021. However, scrap import transactions are limited due to strict import standard requirements. From January 2021 to March 2024, China imported a total of 1.698 million tonnes of recycled steel raw materials, with an average annual import volume of about 550,000t, which is far lower than market expectations.