Big changes to come for ferrous sector

‘Radical and fundamental’ changes to the ferrous scrap industry are anticipated by the new president of BIR’s ferrous division.

Shame Mellor, of Mellor Metals in the UK, thinks the transformation will come from increased demand for high-quality recycled metal products. He looks ahead in the latest quarterly Mirror from BIR, the first since taking over from Denis Reuter.

‘I also believe that it has never been more important to understand how global trade flows are changing,’ he writes. ‘In particular, the industry challenges surrounding current trade barriers and disrupted traditional shipping routes, as well as the longer-term industry desire for a “green steel” evolution.’

His board is preparing for the BIR plenary session at the BIR Convention in Copenhagen in May which will consider the latest supply and demand trends, disruption in the Red Sea/Suez Canal and the effects of the Carbon Border Adjustment Mechanism.

Weak demand in Europe

Meanwhile Reuter, who remains on the ferrous division board, reports in the Mirror on the picture from Europe. ‘In 2023, the steel industry in Germany and elsewhere in Europe was characterised by weak demand, especially from the construction sector; falling incoming orders for mechanical and plant engineering; and still-high energy costs,’ he says.

According to the German Steel Federation, domestic crude steel production fell to 35.4 million tonnes – its lowest level since the financial crisis of 2009. The drop in electric steel production was particularly dramatic at around 11% to 9.8 million tonnes.

‘The fourth quarter of 2023 ended quite satisfactorily for the recycled steel trade despite geopolitical tensions in the Middle East and persistently weak demand for steel,’ Reuter adds. ‘Competition from Asia and the sharp rise in production costs for pig iron led to a significant increase in HMS 1&2 (80:20) cfr Turkey prices in the final three months of the year.

Although Turkish steel mills continued to struggle with a virtually non-existent export business and high import pressure from Asian steel producers, they were prepared to accept exporters’ rising price demands.’

Lower US prices

Reporting on the US situation, George Adams of SA Recycling notes that, despite some continued tightness in obsolete grades of recycled steel, mills are cutting prices as margins shrink on lower new steel prices.

‘While the market may potentially soften in the first and second quarters, there are also new electric arc furnace projects coming online as early as this summer. While these will not increase consumer demand for steel, they will displace some older production and will require 100% recycled steel. That will be positive in the long term for dealers.

‘A still relatively healthy US economy and lower new steel prices by the summer should lead to some restocking and hopefully better demand in the second half of this year. That should help to make it another good year for recycled steel dealers.’