The recycling industry has its own concerns over the tensions between Russia, US and other western countries about a possible Russian invasion of Ukraine.
Russia has amassed a force of 100 000 troops on the Ukraine border and US president Joe Biden has said he thinks an invasion is possible in February. Regardless of the outcome, international political and economic uncertainty typically dampens commodity markets, especially those that are traded across borders, such as scrap metal.
In the forthcoming issue of Recycling International, George Adams, ceo of SA Recycling, one of biggest metal recyclers in the US, believes a conflict between Russia and Ukraine is one of few concerns for the future of his successful company.
‘Assuming there isn’t another Covid outbreak or some black swan event, like a war with Russia or China invading Taiwan, I am very optimistic about 2022,’ he says.
Russia and Ukraine have supplied more than 60% of pig iron to the US in recent years, material sought for electric arc furnaces and the production of more flat-rolled products. There are also fears that, if there is an invasion, western sanctions would prevent banks financing companies in the scrap metal supply chain.
In the first nine months of 2020, according S&P Global Platts, the US took 45% (around 1.4 million tonnes) of Russia’s pig iron exports. Ukraine is a major player in the steel markets and is the 13th largest steel and iron ore producer among the 64 countries reporting to worldsteel. It exports more than 44 million tonnes of iron ore products and is the fifth biggest exporter.
Another side-effect of the crisis could be even higher energy costs, particularly if gas flows from Russia are reduced. Existing costs have already prompted complaints from the European metals industry that its efforts to decarbonise are being severely hampered. Only this month, the European Steel Association (Eurofer) called on the European Union to step in on the wider issue of energy costs.
‘Key European industries such as steel cannot bear all the energy and climate costs that we experience today and are likely to face also in the coming years if policymakers do not take the right decisions now,’ it says.
Eurofer points out that energy-intensive companies have reacted to price spikes by reducing production or temporarily closing plants. Gas and electricity prices have been rising exponentially, it complains, registering up to fivefold increases in comparison with last year.
Back in Eastern Europe, it remains to be seen how conflict or sanctions would impact on recent decisions in both countries to raise tariffs on exported scrap. In early December 2021, Ukraine announced duties would rise threefold from EUR 58 per tonne to EUR 180. From 1 January, Russia’s new rate rose from EUR 70 per tonne to EUR 100.
A decline is already appears to be underway with Russian exports of 3.71 million tonnes of ferrous scrap in the first 11 months of 2021 down 12% on the same period of 2020, according to customs data quoted by Davis Index.
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