Accelerated global growth supports scrap sector

The rollout of Covid-19 vaccines has prompted a faster growth in the global economy than had been expected, according to a senior figure in the stainless steel recycling sector.

Joost van Kleef, commercial director of Oryx Stainless Steel in the Netherlands, also cites measures to tackle the pandemic, greater online shopping, and significant public spending as strategies that have all helped. ‘The overall impact of the pandemic on the business community was significantly lower than many had feared – and this is certainly true for the stainless steel industry,’ he reports in the latest BIR Mirror. ‘However, there has been disruption to international supply chains, mainly due to a lack of sea containers or the financial unattractiveness of this form of transportation’.

Scrap prices boost

Van Kleef, who chairs the BIR Stainless Steel & Special Alloys Committee, notes that the stainless steel industries in North America and Europe in particular regained some market share and increased their crude stainless output during the first quarter of 2021. Nickel, chrome and iron used in stainless steel production recorded significant price increases during the period, ensuring scrap prices followed the general positive trend to reach high levels.

He quotes a recent sales and purchase agreement between Aperam, the stainless and specialty steel producer, and investor Franz Haniel & Cie. to acquire ELG, a global leader in stainless and alloys recycling. ‘This is a remarkable development and shows the importance of steel recycling as a circular economy and our relentless efforts to make the steel industry carbon-neutral as soon as possible,’ he says.

‘The impact of this transaction on the overall supply chain remains unclear but, needless to say, it has the potential to bring significant change to the business of stainless steel recycling.’

Asia angle

In the same Mirror, fellow committee member Vegas Yang of HSKU Raw Material in Taiwan, says Q1 2021 has shown the volatility of nickel. The metal’s price during the quarter had been around US$ 20 000 per tonne before dropping sharply to US$ 16 000 on the announcement by Indonesia’s nickel pig iron (NPI) producers that they would produce 100 000 tonnes of nickel equivalent in the form of nickel matt using NPI as a raw material. After a flat month, nickel steadied at around US$ 17 300 per tonne.

He notes that in China, stainless scrap demand has been steady. ‘Local market pricing of 304 stainless scrap remains below the international level, meaning that NPI is still the preferred raw material option.’

India struggling

Andre Reinders of Nimomet paints a very different picture of an India crippled by the return of widespread infection. ‘The pandemic has also impacted container freight rates into India. Many shipping lines have reduced their Indian ports of call and increased freight rates to between 200 and 400% of pre-pandemic levels. This is obviously affecting imports into India, with material being sourced “closer to home”.

Recent stainless steel scrap import data show, for example, that much less material is currently being brought in from Europe; strong demand from European stainless mills, coupled with very high transportation costs, is making sourcing from Europe less viable – for the time being at least.’

US view

Fellow committee member Doug Kramer of Spectrum Alloys in the US reports that improving stainless steel output, electric vehicle sales and commodity investor sentiment are contributing to firmer prices across the nickel-stainless supply chain.

‘For stainless steel scrap processors and exporters, transportation bottlenecks are still at a critical level given the on-going challenges of securing shipping containers and vessel space,’ he writes. ‘US stainless scrap exports in the first quarter of 2021 tumbled 51% year-on-year to just 5 000 tonnes on reduced trade with India, Canada, Pakistan, Taiwan and Mexico. But the current recovery in prices and output bode well for scrap demand going forward.’

Kramer says analysts are projecting elevated nickel and stainless steel prices in the near term with the International Monetary Fund forecasting the global economy will recover from a 3.3% contraction in 2020 to 6% growth in 2021, including a 6.4% increase in the US.