All change after healthy 2021

Steel production cuts, decline in Turkey, war in Ukraine and a switch to billet ‘has consequences for global scrap sellers’.

As Lee Allen, Fastmarkets’ price reporter, remarked at the BIR world recycling convention in Dubai in October: ‘What a difference a year makes’. Allen’s comprehensive look at the ferrous market during a presentation to BIR’s Ferrous division emphasised a marked change from a healthy European market in 2021.

This year, he pointed out, there were cuts in capacity utilisation, lower Turkish scrap imports and steel production, greater demand for billet and, in South Asia, a growing preference for bulk scrap. ‘These trends do not come without consequences for scrap sellers across the world,’ he warned.

The war in Ukraine is also ‘a large contributing factor’ in lower prices for scrap, he said. Unable to sell in many markets because of sanctions, Russian billet exports into Turkey have grown fourfold this summer and Allen believed it was no coincidence that Fastmarkets’ cfr Turkey HMS (80:20) steel scrap price average had dropped from US$ 631 per tonne in April to a little over US$ 350 per tonne in September as the competition bit.

Concluding by looking ahead, the reporter said Fastmarkets forecasters were bullish on steel scrap and ‘fairly bearish’ on steel. The shift in emphasis in Europe was underlined by the division’s President Dennis Reuter of TSR Recycling who added: ‘Inflows are not that high, to put it mildly, and we are really struggling to secure material. Due to energy prices, demand from the steel mills is not that great.’

Scrap metal ban?

As Recycling International was going to press, the European Parliament was due to vote on proposed changes to the waste shipment regulations due to come into effect in 2026 which will effectively limit scrap exports from the EU.

Metal recyclers argue that, because only 80% of ferrous scrap has a market within the union, the remaining 20% with low commercial outlet is unlikely to be collected. A logical conclusion, they say, is that such scrap will end up being dumped and having to be picked up and disposed of by local communities.

Emmanuel Katrakis, secretary general of the European Recycling Industries’ Confederation (EuRIC) asked of European policymakers: ‘Are they on the same side as a sector at the forefront of championing a European circular economy? Or do they want to encourage the extraction of raw materials over recycling? Waste shipment rules must change course to encourage free, fair and sustainable trade of recycled materials.’ 

Not only will this hinder Europe’s ability achieve its recycling and net-zero emissions targets, EuRIC argues, but ‘green’ job losses will also be unavoidable and investment in Europe’s circular economy will be significantly curtailed. It also points out that European recyclers already contribute EUR 95 billion EUR in turnover to Europe’s economy. 

Once in a generation

Murat Cebecioglu, chairman of IREPAS (International Rebar Exporters and Producers Association) told a meeting in Monaco in early October that the situation in the global long steel products market was deteriorating and ‘the situation is dramatic and huge uncertainty lies ahead’.

He said the current crisis was a once-in-a-generation event with mills and consumers facing an unprecedented increase in energy prices everywhere, but particularly in the EU. In addition to the energy crisis, he said there is also a logistics crisis. Production cuts are expected soon which will balance the drop in demand caused by higher interest rates and costs, and shortages of many items.

The US picture is not much better with months of falling prices and little prosect of improvement with HRC prices at their lowest for a year. Jens Björkman, who chairs IREPAS’s raw material suppliers committee, says US scrap demand has slowed and producers are running at slightly lower capacities, pressuring scrap and iron ore prices.

The supply of new production scrap, which was previously in good shape, has been slower. In China, Björkman notes, demand for steel and raw materials has been weakening, with the outlook remaining negative despite a significant stimulus.

Low utilisation

Joost van Kleef, Europe, chairman of BIR’s stainless steel and special alloys committee, also believes the recession is causing major concerns for stainless steel producers. ‘This is a challenge faced by most industries, to which we can add the influence of a record level of imports of finished goods, particularly in the stainless steel sector,’ he writes in the latest BIR Mirror.

Van Kleef notes that producers are witnessing one of the sector’s lowest capacity utilisation rates and the situation is unlikely to improve in the short term.

The US perspective comes from fellow board member Doug Kramer of Spectrum Alloys. ‘US manufacturers have become increasingly concerned about managing their inventories in the face of rising interest rates, slowing demand and a stronger dollar,’ he writes. ‘The traditional summer lull in steel output and trading activity has also played a part.’

On the brighter side, softening domestic market conditions have been partially offset this year by…

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