China to Lower Import Barriers for Scrap Steel... Easing Standards for Impurities and Mixed Grades

Promoting the Allowance of Mixed Grade Imports such as HMS (80:20)

Adjusting the Maximum Impurity Mix Ratio from 1% to 2%

Global steel media outlet Kallanish has reported that the China Metallurgical Industry Information and Standardization Institute (CMISI) is pushing for revisions to import standards to promote the expansion of scrap steel imports.

CMISI, established in 1963, is an organization under the State-owned Assets Supervision and Administration Commission of the State Council, responsible for research on various steel and metal-related information and standardization proposals.

According to CMISI's announcement, the revision of import standards includes significantly easing inspection criteria, such as allowing the import of scrap steel with a thickness of less than 2mm and mixed grades.

Notably, the new import standards will also add a grade similar to Japan's H2, called 'LRS304,' which is expected to lead to the import of lightweight scrap steel in the future.

Currently, due to high inspection standards, China's scrap steel imports mainly consist of high-grade scrap steel with very low impurity content, primarily heavyweight grades.

The impurity mix ratio for imported scrap steel is planned to be adjusted from the current maximum of 1% to 2%. Additionally, the import of mixed-grade scrap steel will be permitted.

As a result, the representative grade 'HMS No.1&2 (80:20),' which previously faced high rejection rates, is expected to be able to pass customs. The minimum inspection quantity per shipment will also be reduced from the current 300 tons to 30 tons.

Through the related proposal, CMISI expressed that easing scrap steel import standards is expected to lead to an expansion of supply, thereby promoting the advancement of China's steel industry and reducing carbon emissions.

However, despite the relaxation of import standards, it remains uncertain whether China's scrap steel imports will significantly increase, as pointed out by local practitioners through Kallanish.

In fact, China had banned scrap steel imports from 2019 to 2020 due to increasing domestic waste, but resumed imports in 2021.

Nevertheless, since the resumption in 2021, China's annual scrap steel imports have remained around 500,000 tons, about 20-25% of the 2.33 million tons imported in 2017 before the import restrictions.

Moreover, the implementation of the new import standards is expected to take some time, which means the impact on this year's import volume will be very limited.

In the first quarter of this year (January to March), China's scrap steel imports decreased by 54.6% year-on-year to 75,000 tons. Of this, imports from Japan accounted for 42,000 tons, making up 56% of the total.