China Daily quoted industry experts said recycling scrap metals is a way to reduce Chinese steel mills'' dependence on imported ore and ease pressures from the surging iron ore prices.
The proposal comes amid reports that Chinese steel mills have accepted global miners’ quarterly pricing system for their ore at over USD 110 per tonne for April to June contracts more than twice last year''s fixed price.
Mr Cai Jin vice chairman of China Federation of Logistics & Purchasing said Chinese companies should bolster investments in the logistics and supply chain for scrap steel to reduce dependence on imported ore.
Mr Yu Liangui a senior analyst at Mysteel.com said as a substitute for iron ore, recycled scrap steel currently accounts for 8% of total steel production in China, while the figures in developed countries like the United States and Japan have reached 50% and 40% respectively.
Ms Wang Guoqing a steel analyst with Lange Steel Research Center said considering China huge demand for steel production, it would be ideal if recycled steel could account for 20% of the raw materials used by Chinese steel mills.
She said that the steel scrap cycle takes eight years for the auto and home appliance industries, while the infrastructure and real estate sectors require 30 years. She added that "Raising the proportion of imported steel scrap is one way, but it might result in price hikes for imported steel scrap. Hence, enhancing the efficiency of steel scrap recycling technology in China is more important."
She also said that but recycling nor new technologies cannot ease pressure from surging iron ore prices in the short term, especially in the next 10 years.
Chinese steel mills have long complained about a dependence on iron ore imports, putting them at a disadvantage in iron ore price talks. Iron ore imports account for 62.3% of total consumption in China.