Global Metals & Mining: Implied scrap use of steel in China down 3%y/y in May‘26 (-9%y/y in 5M‘26, -15.6%y/y in FY‘25), tailwind for iron ore

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Global Metals & Mining: Implied scrap use of steel in China down 3%y/y in May‘26 (-9%y/y in 5M‘26, -15.6%y/y in FY‘25), tailwind for iron ore

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26 Jun 2026 08:23:24 ET │ 9 pages

Global Metals & Mining

Implied scrap use of steel in China down 3%y/y in May’26 (-9%y/y in

5M’26, -15.6%y/y in FY’25), tailwind for iron ore

Ephrem Ravi AC

CITI'S TAKE +44-20-7986-2462

One of the reasons for the strong iron ore import demand in China (+7%y/y ephrem.ravi@citi.com

in FY’23, +5%y/y in FY’24, FY’25: +2%y/y) despite weak steel production Wenyu Yaohad been the reduced use of scrap in steel making. Implied scrap use (crude

steel-pig iron production) was only 148mn tonnes in China in FY’23; 153mn +44-20-7986-4551

tonnes in FY’24 and 125mn tonnes in FY’25. We suspect this could be partly wenyu.yao@citi.com

because of the tick down in Chinese steel production due to lower steel Jack Shang, CFA

prices making some of the EAFs unprofitable (typically the swing capacity). jack.shang@citi.com5M’26 implied scrap use was down 9%y/y as well (notably crude steel

production in China was down 3.9%y/y in 5M’26) and May’26 was down Krishan M Agarwal

3%y/y. The big swing must come from less scrap usage in converters during krishan.agarwal@citi.com

step up in steel output. If sustained, the support for iron ore demand from

lower-than-expected scrap should continue. Tom Mulqueen

tom.mulqueen@citi.com

Reduced steel scrap usage a key driver of increased iron ore imports into China Shashi Shekhar, CFA

last year — Iron ore imports increased y/y in FY’23, FY’24, FY’25 despite weaker

shashi.shekhar@citi.comsteel production data and weaker apparent demand y/y. A lot of the dichotomy

between the steel data and iron ore data can be explained by lower implied scrap use Omnath Sinh

in crude steel making.