BIR Ferrous World Mirror May 2015

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

The first quarter of 2015 provided a predominantly ‘rough road’ for the steel scrap sector – not least because of the ‘immense wave’ of semi and finished steel exports from China to hit foreign shores, according to BIR ferrous division president Bill Schmiedel. ‘We no longer see the Chinese affecting the ferrous scrap market by how much scrap they buy, but rather by how much steel they export,’ he says.

In the USA, steel mills’ average capacity utilisation rate has improved slightly with the onset of spring. And in South Korea, the upturn in construction activity at this time of the year has boosted long product producers’ running rates. However, annual electricity restrictions will be enforced by the government in Taiwan between May and September this year, with the result that the steel market is likely to be adversely affected.

In late April, meanwhile, the export contract price for H-2 scrap heading from Japan to South East Asia was around Yen 1000 per tonne (or US$ 8.33) below its recent peak at Yen 25 000-25 500 (US$ 208.33-212.50). Scrap arisings in Europe remain under pressure, with some of the larger operators continuing to close yards in certain areas. 

‘The lack of material increases competition, with much of the benefit of higher prices being given away as merchants compete for tonnage,’ it is noted. Nevertheless, there are ‘definite signs of improved trading in the medium term’.

Although the Metal Recycling Association of India, with support from the BIR and other associations, has succeeded in winning a delay in the introduction of revised pre-shipment inspection rules for scrap imports into the country, trade into India ‘has come largely to a standstill for any new bookings from the USA, mainland Europe and the UK’. Sales from the Middle East are continuing owing to the shorter transit and lead times involved.

In the 10-month period from April 1 2014 to January 31 this year, India imported approximately 4.4 million tonnes of ferrous scrap – more than in the whole of the previous fiscal year. Steel scrap collections in Ukraine fell by 400 000 tons last year to 5.3 million tons, not least because of the conflict in the Donetsk and Lugansk regions.

‘Scrap cannot leave the area controlled by rebels’ while some of the businesses supplying high-quality scrap are suffering from a shortage of orders also related to the conflict, it is noted. A government bid to make the Ukrainian export quota distribution system more regular and transparent has not succeeded as yet. I

n Russia, meanwhile, the weak ruble has led to a drop in steel demand on the domestic market and export orders have not been sufficient to shore up production rates, with the result that some mills have announced production cuts and scrap purchasing prices are falling in all regions. More scrap is expected to come forward for export in the coming months ‘although the increase will not be so large owing to logistical and port limitations’, it is contended.

According to the latest ‘World Steel Recycling In Figures’ update from the BIR ferrous division’s statistics advisor Rolf Willeke, steel scrap consumption climbed last year in the EU-28 (+1% over 2013), China (+3%), the USA (+5.1%) and Japan (+0.6%) but dropped back in Turkey (-7.3%).

With China’s steel scrap imports slumping 42.6% last year to 2.564 million tonnes, the country’s usage increase underlines its policy of buying more from domestic sources and of reducing imports. The EU-28 emerged as the leading steel scrap exporter in 2014 following a small increase of 0.3% to 16.859 million tonnes at a time when US overseas shipments were tumbling 17.1% to 15.34 million tonnes.

Declines were also recorded last year in steel scrap exports from Japan (-9.6% to 7.351 million tonnes) and South Africa (-14.2% to 1.489 million tonnes) whereas overseas shipments from Russia soared 53.2% to 5.689 million tonnes.