Page 67 from: November 2007

M A R K E T A N A L Y S I S

640 000 tonnes from Russia and
170 000 tonnes from the Ukraine.

EU scrap exporters also had to
contend with lower fob prices for their
shipments to Turkey, as they could
obtain no more than US$ 340-345 per
tonne cfr for the 80/20 mix of I/II
scrap and a maximum of US$ 335 for
their 60/40 quality. This left little in
the way of a margin as the US dollar
weakened again to around Euro
0.694 – a value some 10% lower than
at the start of the year.

EU scrap exports in the first half of
this year to third or non-EU countries
fell just short of 5.6 million tonnes,
which was some 6.8% higher than the
total in the same period of 2006. Of
this tonnage, some 3 million tonnes
went to Turkey, followed by Egypt on
551 000 tonnes.

Meanwhile, Italian mills have suf-
fered a reduced domestic scrap sup-
ply as the authorities continue to
challenge processors with ever
stricter environmental measures.
In October, four shredder installa-
tions had to stop operations as their
shredder fluff was declared haz-
ardous waste and could not be trans-
ported to landfills.

Eastern Europe

For 2007 as a whole, scrap demand
from Russia’s steel mills is predicted
to be the highest in 20 years at
around 24 million tonnes, which is
20% more than in 2006 and 40%
above the 2005 total. Demand for
27 million tonnes of scrap is foreseen
for 2008. Meanwhile, Russian scrap
collection was predicted to rise to
34 million tonnes in 2007 from 31 mil-
lion tonnes in 2006, although a pro-
portion of the difference is required by
foundries and re-rollers. Russia’s
scrap exports are on a gradually
falling trend and are expected to ar-
rive at around 9.5 million tonnes for
this year – 23% below the 2006 total.

The Ukraine may become a net
scrap importer since its domestic
steel scrap consumption has risen to
over 7 million tonnes and is expected
to surpass domestic collection.
Exports had already fallen below
650 000 tonnes in 2006 and will be
even lower this year. The Ukraine is
presently trying to import major ton-
nages from Russia and also from
Kazakhstan.

Poland, which has been a major
scrap exporter in the past, saw its
shipments decline from nearly 2 mil-
lion tonnes in 2004 to 1.5 million in
2005 and 1.2 million in 2006. Around
50% of Polish scrap exports are des-
tined for Germany and 25% for the
Czech Republic.

Asia

South Korea upped its imports of
scrap to 4.5 million tonnes in the first
eight months of the year – a jump of
25% over the same period of 2006 –
and has been paying slightly im-
proved prices in the fourth quarter.
Faced with bulk freight rates of
US$ 85-95 per tonne which left too
little margin, US West Coast ex-
porters sent major tonnages by con-
tainer to destinations in Asia.

South Korea’s Hyundai mill was
able to secure a large 120 000-tonne
parcel of high-quality A-3 scrap from
Siberia at US$ 370 per tonne cfr for
delivery in November or December.
Nevertheless, the price was still
US$ 5 per tonne lower than that ob-
tained in previous purchases.

Chinese scrap imports have con-
tinued to decline: the Asian giant
brought in 10.4 million tonnes in
2004 and 10.1 million tonnes the fol-
lowing year, but imports fell to
5.4 million tonnes in 2006. According
to the Chinese Association of Metal
Scrap Utilisation (CAMU), imports
amounted to only 2.1 million tonnes
in the first eight months of this year.
At the end of October, CAMU’s Secre-
tary General Yan Qi Ping said that
domestic ferrous scrap demand
would exceed 70 million tonnes by the
end of the present year on the back of

a booming steelmaking industry, re-
sulting in a supply deficit of some
2 million tonnes which would have to
be imported – a much lower figure
than in previous years. He added
that, in 2006, China’s steel industry
had consumed around 160 kg of fer-
rous scrap per tonne of crude steel
produced, which boils down to 16% of
the 480 million tonnes provided for
this year. Scrap consumption in Chi-
na’s BOF mills has been running at
10% in 2007 compared to 10-17% in
previous years. Domestic scrap sup-
ply is growing, Mr Ping concluded.

Taiwan has bought significant ton-
nages of containerised scrap from the
USA at prices ranging from US$ 357
to US$ 363 per tonne cif. Container
shipment has proved to be a good al-
ternative to bulk shipping, although
much of the advantage has been lost
since the Far East Freight Confer-
ence (FEFC) decided to raise rates by
US$ 600 to US$ 1000 per container
with effect from October 1 for exports
from the EU to Asia. This equates to
an increase of some US$ 40 to US$ 50
per tonne of scrap.

Japanese scrap prices dropped
three times in as many weeks during
October – by Yen 500 per tonne
(US$ 4.50) on each occasion and
again in the first week of November.
The decline was due to lower domes-
tic demand resulting from a plunge
in construction work in Japan as well
as to a reduction in exports to China.

Competing commodities

Everybody in the steel world is
waiting for the result of iron ore
price negotiations for 2008. Origi-
nally, steel mills had hoped that an

increase of US$ 10 per tonne would
suffice, but insiders are forecasting a
jump of at least 25% or even 40%.
Thus, iron ore price inflation seems
set to continue: annual contract
prices climbed 8% in 2003, 18% in
2004, a massive 71.5% in 2005, and
19% in 2006. This year, prices were
increased by a more modest 9.5%
but next year’s hike appears likely
to be bigger.

Mining companies claim that
their costs have risen markedly ow-
ing to: higher energy prices; a dou-
bling of shipping freight rates this
year on the back of higher oil prices;
a lack of availability of bulk ore carri-
ers; and congestion at shipping and
receiving ports. They also claim that
they tend to lose money because the
value of the US dollar is declining in
relation to the currencies of the main
exporting countries of Brazil, Aus-
tralia and India. It should be pointed
out that iron ore is still sold world-
wide in US dollars.

Shipping freight rates for iron ore
travelling from Brazil to China are
already over US$ 90 per tonne,
which is more than double the
freight from Australia to the same
destination (US$ 40-45 per tonne).
Freight rates to China from India –
the third largest iron ore exporter –
are around US$ 50 per tonne.

According to reports from China,
higher iron ore prices and shipping
rates have pushed up the average de-
livered-to-mill price for iron ore by
some 27% since January this year.

Pig iron and DRI/HBI are eagerly
sought-after substitutes for scrap,
but pig iron prices jumped to US$ 394
per tonne fob in September for a ten-

Recycling International • November 2007 67

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