The year 2022 has so far seen a mixed picture for the stainless steel and superalloy scrap sector but, generally, recyclers continue to benefit from the global economic upturn as the pandemic eases.
Even so, in Europe, according to industry insiders, the year started with lower order intakes for leading stainless steel flat producers, partly because of the continuing negative effect of the pandemic on the supply chain. At the same time, there have been significant increases in production of stainless steel.
The sentiment is expressed by Joost van Kleef, commercial director of Oryx Stainless and chairman of the BIR stainless steel and special alloys committee, in BIR’s latest Mirror quarterly report.
Van Kleef says other negative factors include an increase in imports of stainless finished goods for a fifth consecutive month, price levels for finished goods in the Far East being well below European market levels, and stocks of finished goods in Germany reaching new highs.
‘Sentiment has changed from the beginning of the year and further developments need to be analysed carefully,’ he says. ‘Ferrous scrap prices have somewhat stabilised while ferro-chrome values are expected to be reduced by the end of March as the differentials to other core markets such as India and China are too wide.’
In the US, higher prices and inflation nearing its highest level in 40 years have had a pronounced impact in the commodities space with mixed implications for US recyclers, according to committee member Doug Kramer, president of Spectrum Alloys.
‘While prices for nickel and stainless steel scrap have been on the increase, thus boosting recyclers’ revenues, energy prices are also elevated and have therefore raised operating and transportation costs,’ he says in the Mirror. ‘Transportation bottlenecks continue to act as a drag on firms’ ability to get material to domestic and overseas customers in a timely manner.’
Kramer notes that although the value of US stainless steel scrap exports increased 24% in 2021 to more than US$ 340 million (EUR 300 million), the volume of overseas stainless scrap shipments declined 3% to 304 000 tonnes, according to Census Bureau trade data. Shipping obstacles and reduced demand from Taiwan more than offset improved demand from markets including India, Mexico and Canada.
The market situation in Asia is very similar to how it was in the fourth quarter of 2021, according to the Mirror. With low demand from China, prices are lagging far behind those in the USA and Europe. Indonesia, meanwhile, has been forced to seek alternative outlets to China, resulting in stainless hot coils and nickel pig iron switching to other Asian countries, notably Taiwan.
Taiwan is currently importing approximately 100 000 tonnes of stainless hot coils from Indonesia each month compared to the 2021 average of 80 000 tonnes. According to BIR committee member Vegas Yang, stainless scrap demand in China has been ‘twitchy’ and coil prices have gone up and down ‘like a yoyo’.
He goes on: ‘Japanese demand for stainless scrap was strong in the fourth quarter of 2021 but the brake was applied a little in early 2022. For the first time in five years, Japan imported more stainless scrap than it exported in 2021 but it remains to be seen whether this trend will continue.’
Vegas adds that weak scrap import demand from India could continue throughout the first quarter of 2022. ‘Imports of ferro-nickel are continuing as usual but with some signs of slowing as they have been hit hard mainly by the non-availability of containers.’
Fellow committee member Uwe Dierkes, managing director of Siegfried Jacob Metallwerke, notes that demand for superalloy scrap has made further gains while not yet fully back to pre-pandemic levels. Oil and gas sectors remain strong while the aerospace industry has boosted demand to a limited extent.
Dirkes says the electric vehicle (EV) sector has established itself as a key driver of the cobalt market and use of the metal by the battery sector is expected to increase by around 30% in 2022.
‘Prices remained buoyant throughout the fourth quarter largely as a result of supply constraints but were also underpinned by restocking demand and EV market requirements. In short, the physical demand is there and has bolstered pricing.’
He also notes an increase in commodity pricing coupled with an upturn in demand for molybdenum from scrap.
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