China plans to supply 45% of steel raw materials for its metallurgy by 2025

According to market sources, China's goal of achieving 45% self-sufficiency in steel raw materials, including iron ore and scrap, by 2025 is difficult, but may be achievable if the country's scrap steel production continues to grow steadily.

The goal was mentioned in a draft quality development guide for the steel industry issued by the country's Ministry of Industry and Information Technology (MIIT) on the last business day of 2020, and the document will be under public review and feedback until January 31st. , Noted in Mysteel Global.

To achieve this goal, MIIT proposed in the project “to develop one or two foreign projects for the extraction of iron ore with economic efficiency and global influence in order to increase the country's self-sufficiency from the total volume of imported iron ore to 20%”, as well as “to expand the supply of steel scrap to domestic market up to 300 million tons /year. "

“It will be quite difficult in the near future as China's domestic iron ore resources are quite limited, and at least 80% of iron ore consumption depends on imports, sometimes up to 90%, mainly from Australia and Brazil,” Xu Xiangchun, Senior Analyst at Mysteel , admitted.

However, "the chances of increasing the annual supply of scrap steel to the domestic market to about 300 million tons from more than 200 million tons are now much higher," he added.

A Shanghai-based analyst agreed that the scrap steel supply target is more likely to be met, and that it may take less time to reach the 300 million tonnes per annum target than by 2025, as China is capable of producing about 260 million tonnes of steel per year. scrap at the moment, he said.

According to the latest available data, by 2019, China had consumed 240 million tonnes of scrap steel in its steelmaking industry, with almost all of this coming from domestic sources.

In contrast, in January-November 2020, according to the General Administration of Customs of China (GAC), iron ore from Australia and Brazil accounted for 61% and 20%, respectively, of China's total iron ore imports during this period.

As tough as it is, the vulnerability of Chinese steel mills to iron ore pricing due to their heavy reliance on imported iron ore in 2020, for example, could push domestic steel producers into a fight, or their steel margins will always be affected by the risk of being threatened by soaring iron ore prices, Xu added.

Last year, especially in the second half of the year, strong demand pushed Australian Mysteel SEADEX Fe 62% Fe fines to a new high since mid-September 2011, reaching USD 176.05 per ton CFR in Qingdao at