BIR Ferrous Metals World Mirror June 2013

Global – The following article is based on the latest Ferrous World Mirror produced by the BIR world recycling organisation for the benefit of its members.

China followed up its significantly-reduced steel scrap consumption in 2012 with a 6.6% year-on-year increase to 22.7 million tonnes in the first quarter of 2013; this was achieved despite a 1.2% drop in its imports to 1.276 million tonnes, reports the BIR Ferrous Division’s statistics advisor Rolf Willeke in his latest ‘World Steel Recycling in Figures’ update. Also in the first quarter, steel scrap usage declined in the EU-27 (-7.4%), the USA (-9%), Turkey (-9.5%) and Russia (-11.5%), among others.

The world’s leading steel scrap importer Turkey cut its overseas purchases by 18.6% in January-March this year to 4.343 million tonnes, while the Republic of Korea bought in 2.32 million tonnes – or 3.5% less than in the corresponding period of 2012. The USA remained the leading global exporter of steel scrap despite overseas shipments edging 0.9% lower to 5.389 million tonnes in this year’s first quarter.

Meanwhile, EU exports plummeted 31.8% to 3.951 million tonnes, with Turkey remaining the top recipient despite slashing its purchases by 28.2% to 2.157 million tonnes. There were also substantial declines in steel scrap exports from Canada (-8.4% to 1.089 million tonnes), Russia (-29.9% to 0.665 million tonnes), Australia (-36.9% to 0.39 million tonnes) and South Africa (-20.2% to 0.331 million tonnes). In contrast, Japan shipped out 2.438 million tonnes of steel scrap in the January-March period – or 25.3% more than in the opening three months of 2012.

Based on an extrapolation of five months of World Steel Association data, the world will produce 69 million tonnes more raw steel and 47 million tonnes more iron this year than in 2012, while apparent consumption of purchased scrap will climb by 22 million tonnes.

In the individual markets, supply of unprepared shredder feed remains ‘tight’ in the USA at a time when automotive stamping plants are gearing up for model year changeover shuts that will cut scrap generation. The scrap market in the EU, meanwhile, has been described as ‘lethargic’, with price reductions on most scrap grades in June limited to around Euro 10-15 per tonne because of low arisings. ‘Some yards are operating at 50% of capacity as material is simply not flowing,’ it is noted. ‘We are also entering the summer shutdown period, which will put further pressure on arisings.’

In Asia, China’s raw steel production is running at an annualised rate of 790 million tonnes, resulting in low material margins, increased steel exports and ‘financial hardship to the extent that banks are reluctant or unwilling to provide loans to purchase iron ore and other raw materials’. Summer power outages in the Republic of Korea are widely expected to reduce steel output and raw material consumption. Meanwhile, Taiwan and several countries in South East Asia are consistent buyers of both bulk and containerised scrap.

Ferrous scrap imports into India achieved record levels in the financial year ended March 30: the total of around 6.9 million tonnes outstripped the 6 million tonnes of 2011/12. More recently, however, Indian buyers have been showing limited interest ‘even at lower price points’, not least because of the rupee losing a sizeable chunk of its value in relation to the US dollar.

Currency gyrations have also affected the Japanese market. Since the late-May BIR Convention in Shanghai, the Japanese scrap market has fallen by around 10% and this depressed tone is likely to persist unless the exchange rate weakens beyond Yen 100 to the US dollar. Scrap supply in Japan is said to be sluggish.

In Russia, almost all mills are holding good steel scrap stocks, with some even trying to limit incoming flows. Meanwhile, exports have been supported by a weak Russian ruble and overseas shipments are expected to be higher this year than in 2012. Meanwhile, new export quotas were distributed in Ukraine last month, although not much scrap has been offered to Turkey because of the strength of the domestic market.

In general, problems surrounding overcapacity and gross margins ‘will continue to prevail’ in the next few months, BIR Ferrous Division president Christian Rubach has warned. But there is ‘no doubt’ in his mind that ‘our recycling business will be one of the most prosperous within the next decade’.