Scrap metal is a normal input into any steel making process....

Scrap metal is a normal input into any steel making process. This is not new and is typical newspaper sensationalism.

As the Chinese economy matures, recycling is likely to increase, a hallmark of a maturing economy. However, the growth in steel usage far outstrips any increase in scrap metal supply. This is because the greatest volumes of scrap metal actually come from building renewal, ship decommissioning, and, yes, cars. The longevity of all of these metal uses means that the scrap they provide is usually 60 years (buildings) to 12 years (cars in 3rd world and emerging countries) after they were built (http://www.worldsteel.org/media-centre/Steel-news/Steel-scrap--A-world-traded-commodity.html). That is, scrap lags demand by 12 to 60 years! Hardly a major cause for concern for the IO producers given growth in GDP over that time.

In China, the threat of scrap is even lower. This is because old buildings are being replaced with more spacious ones. In the '50s to '80s the typical chinese family lived in a two room flat. They are now demanding western style apartments with bedrooms, bathrooms, living rooms, kitchens - all the standard things you and I take for granted. Think about the building materials that are used for that build, and what they replace (ie, the scrap the replacement delivers).