Chinese steelmakers need to take more systematic measures to ensure their supply of raw materials, given that China's steel sector remains heavily dependent on supplies from overseas markets, according to a recent report by China Metallurgical News (CMN), the official media outlet of the Chinese Association of Ferrous Metallurgy (CISA).
The dependence of the Chinese steel industry on imports of iron and manganese ore constantly exceeds 80 percent, while dependence on imports of nickel ore exceeds 90 percent, and dependence on chromium ore approaches almost 100 percent, while the share of Chinese foreign mines The total volume of supplies is less than 10 percent, as reported. However, China largely provides itself with coal and fluxes.
Leading steel producers, including Baowu Group and Angang Group, have established powerful and reliable supply chains, while most steel producers are still relatively weak in this regard. In this regard, the steel industry urgently needs to improve the reliability of supplies of raw materials and fuel.
Baowu Group has implemented an iron ore carbon footprint tracking system, through which it prioritizes purchases of high-quality iron ore such as the Australian Pilbara iron ore, of which the carbon intensity is less than 1.8 million tons of CO2 per a ton ores that comply with EU requirements. problems with carbon dioxide tariffs газа.
Meanwhile, thanks to its "intelligent" ore processing base on the Yangtze River in the eastern Chinese city of Zhenjiang in Jiangsu Province, Baowu has built an integrated system that reduces the average delivery time of iron ore to nearby factories by 40% and improves quality, according to the report, inventory turnover increased by 30%. Even in adverse weather conditions such as the Yangtze River flood season. In heavy fog conditions, Baowu can meet the steel mills' demand for iron ore by coordinating stocks at ports in advance, thereby reducing the risk of disruptions in the supply of raw materials to the region's steel mills.
HBIS Group has also implemented an intelligent ore mixing platform. Using its strategic position in Tangshan Port, the company has built China's first inter-regional intelligent iron ore mixing plant. The platform allows precise mixing of Australian, Brazilian and domestic ore in dynamic proportions, keeping the fluctuations in the quality of raw materials within 0.3%, as well as reducing the overall cost of iron ore.
In addition, Shagang Group, a leading Chinese electric arc furnace (EDP) company based on a steel manufacturer located in East China's Jiangsu Province, has established 12 scrap recycling centers in the Yangtze River Delta, relying on long-term agreements with vehicle dismantling companies and demolition companies. This strategic step ensured stable scrap supplies to Shagang even during national shortages and contributed to maintaining high operational performance of the electric steelmaking plant.
In 2025, domestic steel mills with a short processing time faced a serious shortage of scrap. Almost 40 percent of independent steel mills based in EDP were forced to suspend production due to disruptions in the supply of scrap. As opposed to In addition, Shagang Group maintained a stable level of self-sufficiency with scrap at 78 percent, and the utilization rate of its electric steelmaking equipment production facilities consistently exceeded 90 percent. The company was even able to distribute the excess scrap to nearby small and medium-sized steel mills, which helped to curb the irrational increase in scrap prices in the region.
Quantification of the availability of raw materials is equally important. Steel companies can create evaluation systems that measure overall competitiveness along with the performance of a particular product, covering both managerial capabilities and operational execution. This allows steel companies to compare themselves with their peers and identify areas for improvement, CMN claims in its отчете.
More importantly, steel companies need to reduce the cost of purchasing raw materials through several channels. Steel companies can create new competitive suppliers to increase competition in the market, while groups of companies with multiple branches or regional companies can consolidate their procurement needs to strengthen their negotiating positions and flexibly adjust procurement rhythms, using scarce stocks to hedge against price volatility, the report says.
In addition, metallurgists should pay more attention to investments in raw materials and fuel projects. Senior management needs to prioritize mining investments, appoint dedicated teams to track opportunities, and make timely recommendations. Before investing, conduct a thorough due diligence with the involvement of third-party experts to avoid the risks associated with poor timing or poor valuation, CMN recommends, adding that newcomers to mining should consider participating in equity or joint investment groups to share the risks and benefits.
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