Little cheer in ferrous sector

Ferrous traders are hoping for a brighter fourth quarter to the year after reporting a gloomy first half for 2023.

The latest Mirror from the Bureau of International Recycling notes that, while the first quarter of recycled steel trading was ‘satisfactory’, sentiment deteriorated significantly in the second quarter, with international quotations falling by almost 20% after mid-March.

Denis Reuter, president of the ferrous division, writes: ‘There were increasingly clear signs of a slowing of steel demand. Weak industrial data and a continuing depressed real estate market dampened economic optimism in China, and measures taken by the central government failed to revive consumption.’

At the same time, he adds, the Chinese steel industry increased its production, up 1.6% year-on-year in the first five months. Sales on the world market also rose, which in turn increased the pressure on international steel prices and led to a reduction in steel production outside of China.

Weaker expectations

‘In Europe too, the situation is rather unfavourable,’ Reuter says. ‘The optimism at the beginning of the year seems to have given way to a greater sense of reality. Production expectations have weakened further, order books have become much thinner despite the recovery in May, and the build-up of inventories has not yet come to an end. Energy-intensive industries were hit particularly hard, with their output 12% lower than a year earlier.’

On top of this, he points out, Turkey’s steel segment has lost its competitiveness on the international steel market. ‘The Turkish government faces a mammoth task: the necessary reconstruction of the areas destroyed by the earthquake requires substantial investment, and this is happening at a time when spending cuts and a move away from low interest rates are urgently needed to get a grip on inflation and the massive devaluation of the Turkish lira.’

He concludes: ‘Hopes rest on the fourth quarter. Positives could come from effective economic stimulus measures in China, a confident economic policy from the Turkish government and an end to the cycle of interest rate hikes by the largest central banks.’ 

Global data

In an update on steel data from worldsteel, BIR statistics advisor Rolf Willeke reported that in the first quarter of 2023, global crude steel production totalled 459.3 million tonnes for a slight decline of 0.1% over the same period in 2022. Data show a decrease in crude steel production everywhere except Asia which remained the largest producer with a 3.4% year-on-year increase to 344.2 million tonnes.

According to our statistics, China’s recycled steel consumption was 0.2% higher in the first quarter of this year at 57.46 million tonnes, although there was a significantly steeper year-on-year increase in the country’s crude steel production (up 6.1% to 261.6 million tonnes).

The first quarter of 2023 brought a 24.4% decrease in Turkey’s overseas recycled steel purchases to 4.929 million tonnes. India was the second-largest importer in the first three months of 2023 (up 156.6% to 3.282 million tonnes) while the USA was in third place with an increase of 22.3% to 1.303 million tonnes.