SHANGHAI, China The
Chinese governments latest five-year plan highlights the
countrys scrap industry as a key sector, leading market
players to expect government-backed growth in that industry in
the near future.
The Chinese government said it
wants to encourage moreand more-efficientrecycling
of the growing reservoir of waste material emerging after
decades of rapid economic growth, particularly as it encourages
the steel industry to rely less on iron ore and more on ferrous
The government also wants to
tackle Chinas carbon emissions and environmental problems
by supporting the emergence of "clean" industries, such as
As part of the apparent policy
shift, the government could apply a value-added tax (VAT)
rebate on scrap sales starting next year, sources said.
The scrap industry association
has been lobbying the government for possible incentives and
"some tax cut is expected in 2013 to encourage production," a
source at the China Association of Metal Scrap Utilization
(CAMU) told AMM sister publication Steel
CAMU said it hopes the VAT will
be slashed to 8.5 percent from 17 percent.
Ferrous scrap companies are now
eagerly awaiting the expected tax cut, which may help them
increase supply to meet growing demand for scrap.
"Chinas scrap supply remains tight and scrap only
(accounts for) a small proportion of raw material feed at
Chinese steel mills. To increase scrap supply and consumption,
an incentive like a tax cut is needed," a steel mill source in
eastern China said.
A version of this article was first published by AMM sister
publication Steel First.