Scrap steel in China is emerging as a significant threat to the future profits of the world’s biggest mining companies.
BHP, Rio Tinto, Anglo American, Vale and Fortescue Metals rely heavily on Chinese demand for steel made mainly from iron ore shipped from mines in Australia, Brazil and South Africa.
Locally mined material is also an important source of iron ore in China but another source, scrap steel, has played a lesser role than in other countries with big steel industries, such as Japan.
One estimate, from Morgan Stanley, an investment bank, is that scrap steel currently represents just 20% of the feedstock consumed by Chinese steel mills compared with 32% in Japan with its more developed economy.
Over the next 10 years years scrap use in Chinese steel making is expected to rise to approach Japan’s share, perhaps reaching 30% of overall steel mill feedstock by the year 2030.
For the rest of this article: https://www.forbes.com/sites/timtreadgold/2020/12/02/chinese-junk-could-sink-the-profits-of-big-iron-ore-miners/?sh=267150fd7a85