BIR World mirror on ferrous scrap

Global – The following article is based on the latest Ferrous World Mirror produced by the BIR world recycling body for the benefit of its members. The complete ferrous analysis can be downloaded at www.bir.org

Will scrap availability worldwide be sufficient to cover ever-increasing steel production? Some credible forecasts suggest annual world crude steel production will reach 2 billion tonnes in not so many years from now. Even if BOF production accounts for most of the increase compared to EAF output, it is still pertinent to ask the question as to whether there will be sufficient scrap to feed all this additional steel production, according to BIR Ferrous Division President Christian Rubach.

In this context of rising demand for scrap, he adds, there are already significant indications in the EU that some politicians and industrial interests would like to restrict exports. “BIR and all of its members, individual companies and national federations, have to be on the alert when we see signs that could lead to the hampering of free trade worldwide,” he asserts.

The pace of world crude steel production growth quickened at the start of the year despite the fact that 2010 produced a record output for a single year. Based on an extrapolation of World Steel Association (WSA) data for January, the world will produce 39 million tonnes more raw steel in 2011 and 21 million tonnes more iron. At the same time, apparent consumption of purchased scrap will increase by a further 18 million tonnes.

Looking back on 2010, Chinese steel scrap imports plummeted from around 13.7 million tonnes in 2009 to just 5.9 million tonnes whereas Turkey’s steel scrap imports soared 22.5% to 19.2 million tonnes, thereby cementing the country’s position as the world-leading buyer of steel scrap on the international market. Also in 2010, South Korea’s scrap imports jumped 3.7% to 8.1 million tonnes while Taiwan’s overseas purchases surged 37.1% higher to 5.4 million tonnes.

India’s imports of ferrous scrap amounted to around 4.75 million tonnes in the financial year ending March 31 2010. However, in the first quarter of the ensuing fiscal period, incoming volumes dwindled to around 1 million tonnes – a sure sign, it is claimed, that India is an opportunistic buyer of ferrous scrap on the international market whose purchases are guided strongly by price. On the legislative front, India’s Directorate General of Foreign Trade has cancelled the pre-shipment inspection (PSI) licences given to some agencies and blacklisted others for issuing wrong certificates.

In other figures, crisis-torn Japan reportedly consumed 43.9 million tonnes of steel scrap in 2010 – equivalent to a year-on-year increase of 28.8% – whereas its exports slumped 31.1% to just under 6.5 million tonnes. Among the world’s other leading scrap exporters, outgoings from the USA slid 8.4% to 20.6 million tonnes despite its shipments to Turkey leaping 18.3% to 4.4 million tonnes. The EU exported approaching 19 million tonnes in 2010 – equivalent to a year-on-year increase of 28.2% – with Turkey emerging as the biggest buyer on 10.7 million tonnes (+44.4%).

Meanwhile, Russia recorded 98.9% growth in its exports last year to 2.4 million tonnes. However, new proposals coming under serious consideration by the Russian government could slash the country’s annual steel scrap exports to less than 700 000 tonnes per annum, it is alleged. The proposed move would limit the ports allowed to handle steel scrap to just Kaliningrad, Azov and Magadan.

Total scrap collection volumes in Russia increased by around 4 million tonnes last year to some 21 million tonnes. In the Ukraine, meanwhile, collections amounted to almost 7 million tonnes in 2010.

Turning to market developments during the first quarter of 2011, prices fell significantly in Europe during February but considerably firmer conditions have emerged in March owing to a number of factors, including South East Asia’s return to the market at more competitive levels. As a result, Turkey has come under pressure to match these prices for EU and US scrap.

Despite reasonably high stock levels at many of Europe’s export docks, healthy and consistent demand is helping to bolster confidence in the market. Across in the domestic US market, meanwhile, the consensus is that April scrap prices will increase significantly.

* In the wake of the devastating earthquake and tsunami earlier this month, the Japan Iron & Steel Recycling Institute (JISRI) has set up a relief fund for the most damaged Tohoku region of the country and for those JISRI members working and living there. Members of the BIR Ferrous Division are being urged to show their support for this worthy cause.