BIR Ferrous World Mirror May 2012

Global – The following article is based on the latest Ferrous Metals World Mirror produced by the BIR world recycling organisation for the benefit of its members.

In the coming years, national federations, BIR and exporting companies must concentrate their efforts to ensure free and fair trade worldwide for secondary raw materials, according to Christian Rubach, President of the BIR Ferrous Division. With trade barriers of all kinds ‘€˜on the agenda in many countries around the globe’€™, he states, ‘€˜all of us will have to convince, to lobby, to persuade legislators, politicians and all other decision-makers that free trade in accordance with WTO regulations is the only way towards prosperity.’€™

Latest figures released by BIR show that leading scrap importer Turkey hiked its overseas purchases by 11.8% to 21.46 million tonnes in 2011 while the Republic of Korea and China also recorded substantial increases in imports – the former of 6.6% to 8.628 million tonnes and the latter of 15.7% to 6.767 million tonnes. The USA, the world’€™s top scrap exporter, saw its shipments abroad leap 18.6% last year to 24.373 million tonnes with the help of exchange rate movements. Shipments out of Russia surged approaching 70% to 4.042 million tonnes whereas the EU-27 found overseas customers for 18.77 million tonnes, which is equivalent to a year-on-year decline of 1.4%.

Last year’€™s increases in steel scrap usage in the EU-27 (+4.5% to 100.8 million tonnes) and in Turkey (+21.9% to 30.8 million tonnes) outstripped the respective upturns in crude steel production (+2.7% to 177.2 million tonnes for the former and +17.8% to 34.1 million tonnes for the latter).

In contrast, scrap consumption in China climbed only 3.3% to 91 million tonnes whereas the country’€™s crude steel production jumped 9.1% to 683.9 million tonnes. And the figures from the USA were even more noteworthy: crude steel production advanced 7.3% to 86.4 million tonnes in 2011 and yet scrap usage tumbled 6.6% to 56 million tonnes. Scrap consumption in Russia slipped 2.2% to 21 million tonnes despite a 2.9% upturn in steel production to 68.6 million tonnes.

In the first quarter of 2012, world raw steel production was 1.1% higher than in the same period last year at an annualised rate of 1.507 billion tonnes. Based on an extrapolation of three months of World Steel Association data, it has been calculated that the world will produce 12 million tonnes more raw steel and 20 million tonnes more iron this year, although apparent consumption of purchased scrap is on course to decline by 8 million tonnes.

Turning to the individual markets, the consensus within the US trade is that scrap prices for May will be largely unchanged, not least because of supply tightness. In Europe, what is described as a ‘€˜far more disciplined approach’€™ among buyers has generally kept price movements within a range of US$ 20-40 per tonne. Key issues remain exchange rate movements, container availability and scrap flows, but demand remains in place, it is noted.

For China, imported deep-sea and short-sea scrap has become more price competitive whereas earlier purchases have enabled buyers in the Republic of Korea to take more of a back seat of late. In Indonesia, ‘€˜extreme’€™ container port congestion has resulted from significant delays to the inspection/customs clearance of container cargoes, prompting domestic scrap prices to surge higher. And in Japan, blast furnace mills have been keeping purchases of domestic scrap to a minimum while electric arc furnace operators have cut production in a bid to boost finished product sales prices. The Japanese scrap market is expected to continue to soften gradually for most of the second quarter.

An increase in container freight rates has meant that import prices for India remained firm in April at around US$ 490 per tonne CFR Nhava Sheva for shredded scrap. The rupee’€™s recent appreciation against the US dollar has renewed pressure on Indian importers but buying activity has persisted because of healthy domestic demand for finished steel and firm prices in the local market.

In Russia, domestic scrap consumption fell around 10% in the first quarter of 2012 to some 3.3 million tonnes while exports dipped to 750 000 tonnes from nearer 830 000 tonnes in January-March 2011. Icy conditions in a number of ports had a significant impact on shipping activities in the first quarter of this year.

Snow and freezing temperatures in the Ukraine served to ensure that only 950 000 tonnes of scrap was delivered to steel mills in the first quarter as against almost 1.6 million tonnes in the corresponding period of 2011 – equivalent to a drop of more than 40%. The weather – and therefore scrap flows – have subsequently improved, but now many scrap companies are reporting payment delays for delivered raw material. It is also feared that delays over the issuing of new export quotas could represent the first sign of attempts by Ukrainian government officials to limit steel scrap exports.