We are still some years away from China saturating its scrap market.

Certainly there is a calculation to reduce use of iron ore and the China government rarely takes strategic measures that are not dual purpose, but it is not that simple.

It is not either iron ore *or* scrap, it is iron ore *and* scrap. As a mass steel manufacturer you need to be able to play with the balance of raw material, if you don't want to fall into a cost disadvantage trap.

The blast oxygen furnace (BOF) you can't turn on and off at will, you must run it constantly at minimum 60-70% of capacity. It is a process of about one month to stop a BOF and about 5-6 weeks to start it up again, whereas an electric arc furnace EAF using scrap can be literally turned on and off at will, without destroying it.

Using only EAF comes at a price of being highly dependent on electricity prices and on a small, but potent "mafia" of scrap suppliers in China.

In China always everything is big commodity thinking, that is why China has in spite of all efforts never managed to reduce imports of steel products below 12 million metric tons.

It is special steels that every advanced economy needs, that are made almost exclusively using EAFs, including stainless ones and that is what China imports.

Special steels are an art to produce, which in some cases involves decades of experience. Look at the staff of western special steel makers, you will see a lot of grey hair. Not so at Chinese special steel makers.

Likewise the application of special steels, turning them into products is not Legoland. Even under long running production there is a lot of trial and failure, and failures add to the cost of production and prices.

It is the special steels and products made thereof that China still needs to import and that it wants to eliminate.

Adding to the complication, high end equipment made of special steels, for example high pressure, high temperature pipes for super-critical areas of nuclear power plants, is mostly defined in the design drawings of such equipment with the type and manufacturer. You do not replace that at will with other manufacturer's products, without running unsustainably high risks.

Therefore, you have a dual effect. Yes, the import substitution drive has created smaller special steel manufacturers. But they need to export, as domestically no engineer in his right mind will boldly sign off on replacing elements of the original design.

Consequently, China starts at the standards and at the designs and there puts specifically local manufacturer's materials and products. That is an enormously long process and we are only now seeing China moving to the domestic design of nuclear power plants, that has been in the pipeline for ages.