Feature: Can China's import of recycled steel take the heat off iron ore prices?

As iron ore prices surge to never seen before highs, propelled by recovering global steel demand, an increasingly popular narrative is making its rounds in China on the potential of replacing, or supplementing, the Fe element in steelmaking with recycled steel, following China's lifting of import restrictions on ferrous scrap in January 2021.
 

While the reliance on iron ore may seem unassailable in the short term, demand for ferrous scrap is gradually gaining momentum under China's overarching carbon neutrality goals.

With the passing of the first half-year mark for the new classification for recycled steel, scrap imports put no pressure on seaborne iron ore prices due to its limited usage in basic oxygen furnace, or BOF, thin cost-efficiency, and tight supply.