Ferrous scrap demand increases

IREPAS, the global association of producers and exporters of long steel products, has reported that the general demand for ferrous scrap increased in February and continued into March.

‘The first quarter of 2023 has seen substantially lower energy prices, which has alleviated the strain on industries,’ it notes in its latest short-term outlook, adding that production levels had normalised while raw material inventories were being restocked more quickly.

‘Raw material availability was outpaced by demand during the second half of February and early March. The outlook remains tight. The Turkish government had said it would impose import duties on flat steel products to promote domestic production, which would create additional demand for ferrous scrap imports. However, the implementation of the duties has been postponed in the aftermath of the earthquakes.

IREPAS adds that Asian scrap prices have typically been higher than Turkish scrap prices but transaction prices to Turkey are now about the same. ‘Concurrently, scrap demand and prices are on an upward trend in Europe. The same is true in the US market, but the increases there are larger.’

The US is still producing fewer tonnes than in 2021 and 2022, it adds, and general demand is flat. ‘Domestic long product prices were too low for months and have now started to move up, giving a slight chance to imports, but this will soon disappear with the increases in international scrap prices. Bulk prices have softened a bit, but stevedoring rates are high at congested ports. Labour shortages are not expected to change anytime soon.’

Brighter aspects are that electricity prices are falling and the cost for mills is decreasing while the anticipated reconstruction works after the devastating earthquakes in Turkey are said to be driving market expectations.

‘Logistics are becoming easier and cheaper. Sea freight was at low levels during the winter as demand was slow and ship availability decent. Logistics bottlenecks are starting to disappear, which gives more room for new positioning and import options in markets.’