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Brighter outlook for world markets

Hot-rolling at NLMK La Louviere (NLMK Group)

Tentative signs of recovery in the global economy are included in the latest weekly briefing from the Institute of Scrap Recycling Industries with data showing stronger US exports of recovered paper, improved steel sentiment and greater optimism from purchasing managers.

The US International Trade Commission has reported that US recovered paper exports increased 10.8% to 1 092 812 tonnes in June 2020 from the previous month. Even so, exports in the first six months of the year were down 23.4% on the same period last year at 6 854 861 tonnes.

During that period, Vietnam (+ 3.3%) was the only country in the top 10 that received more US paper scrap exports than they did in the same period last year. Exports to Indonesia were down 61.5%.

Global steel market sentiment appears to be improving slowly, according to IHS Markit: ‘Global steel users saw a strengthening of business conditions in July, the first seen for eight months, as demand began to pick up following the Covid-19 pandemic. The rise in new orders was weak though and, despite output rising, firms continued to lower employment.’

The seasonally adjusted Global Steel Users PMI rose above the neutral 50.0 mark to 50.7 in July, up from 49.4 in June. It is the first improvement in the health of the global steel-using industry since November 2019.

Among other indicators reported by ISRI, the Global Composite Output Index from JP Morgan and IHS Markit increased from 47.8 in June to 50.8 in July, the first reading above 50 since January.

The PMI from by the Institute for Supply Management increased from 52.6 in June to 54.2. The ISM reports that prices for diesel fuel, steel and steel products fell in July while there were rises aluminium, copper, crude oil, HDPE, PP, oil-based products, plastic products and precious metals.

IHS Markit also reported improving global aluminium market sentiment in July with its Global Aluminium Users PMI above 50.0 for the first time in eight months. But ISRI warns that rising trade tensions may erode recent gains in the global aluminium market sentiment, quoting Fastmarkets as saying,

‘The United States’ reintroduction of Section 232 tariffs against imports of Canadian aluminium has made European market participants nervous about excess stock arriving from Canada, which could pressure premiums’.

Another less less positive note is data showing that US aluminium scrap exports were down 9.3% during the first half of 2020 as shipments to China were nearly cut in half.

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