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BIR Ferrous Metals World Mirror April 2013

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.

World crude steel production climbed 1.2% to a record-breaking 1.548bn tonnes last year and yet the amount of scrap used in global steelmaking was effectively unchanged at around 570 million tonnes, according to statistics advisor Rolf Willeke in his ‘World Steel Recycling in Figures’ update for the BIR Ferrous Division’s latest World Mirror.

The dominance of China, which last year produced 46.3% of the world’s crude steel, goes some way towards explaining why scrap consumption failed to match the growth in steel output. Relatively low iron ore prices led the country’s steel industry to slash its scrap usage by 12.3% last year to 79.8 million tonnes even though its crude steel output climbed 3.7%. In Russia too, steel output was higher in 2012 and yet scrap consumption fell 4.4% to 20.1 million tonnes.

Steel scrap usage also declined in the EU-27 (-6% to 94.1 million tonnes) and in Japan (-4.6% to 35.5 million tonnes). In contrast, steel scrap use in the USA jumped 9.4% to 61.7 million tonnes despite only 2.7% growth in domestic crude steel production. And in Turkey, scrap usage surged 5.1% last year to 32.4 million tonnes, of which 22.415 million tonnes (+4.5%) was imported.

Among the world’s other leading importers of steel scrap, last year saw incoming volumes grow particularly sharply in South Korea (+17.4% to 10.126 million tonnes) and in India (+32.4% to 8.18 million tonnes). Chinese imports plunged 26.5% to 4.974 million tonnes while lower figures were also recorded by Taiwan (-7% to 4.955 million tonnes), the USA (-7.2% to 3.711m tonnes), the EU-27 (-8.1% to 3.412 million tonnes), Indonesia (-9.9% to 1.944 million tonnes), Malaysia (-11.4% to 1.816 million tonnes) and Thailand (-9.4% to 1.701 million tonnes). The USA remained the world’s leading exporter of steel scrap in 2012 although shipped volumes fell 12.2% to 21.397 million tonnes ‘from the high figure of 2011’, Willeke points out. Steel scrap exports from the EU-27 climbed 2.1% to 19.214 million tonnes in 2012 while those from Japan soared 57.9% to 8.459 million tonnes.

In commenting on statistics in general, BIR Ferrous Division president Christian Rubach underlined the fact-based argument in favour of free and fair trade. The availability of scrap in Europe, the USA and other OECD member states is sufficient for the steel industries of those countries and regions while ‘only the volumes exceeding demand find their way into the export channel’, he insists.

The Mirror report covering Europe acknowledges that ferrous scrap, billet and rebar prices have softened of late but adds that demand for material ‘remains healthy’ while market sentiment ‘is not overly pessimistic’. Spain is active in the market while Turkey is still in need of buying ‘a considerable quantity’ for May. Expectations are that the market will ‘move within a tight band’. In the USA, meanwhile, order book backlogs for HRC are ‘only one or two weeks’, and prices have fallen for A36 plate, WFB and SBQ, whereas merchant bar is ‘holding steady’.

In Asia, China has been purchasing deep-sea scrap cargoes in recent months for ever-declining sums. Domestic raw steel production set a new record of 2.124 million tonnes per day in the first third of April but ‘unsold steel inventories are high and steel prices are generally falling’.

Domestic scrap prices are being pushed lower in South Korea while Taiwan has placed no deep-sea scrap cargo orders in recent weeks.

With the deterioration in international scrap market sentiment, leading Japanese scrap consumer Tokyo Steel lowered its buying price four times in the first three weeks of April by a combined sum of Yen 2500 per tonne (US$ 26). Unless the yen depreciates dramatically, the Japanese scrap market is likely to continue to soften in the coming months – ‘reflecting the weak tone of the international scrap market and the improvement in collection volumes since the end of winter’.

In India, the ‘blistering’ pace of ferrous scrap imports has slowed somewhat. In April to December last year, the country imported around 5.47 million tonnes compared to around 6 million tonnes in the whole of the financial year to March 31 2012. Most of the country’s importers are said to be ‘cautiously optimistic’ about an improvement in demand over the coming months although concerns persist over the volatility of the Indian rupee in relation to the US dollar and high domestic interest rates.

Despite lower scrap prices on international markets, exports from Russia have benefited from healthy collection volumes, lower freight rates and a weak ruble. On the downside, however, a major steel scrap consumer in central Russia has announced it will not be taking deliveries for the moment, thus applying pressure to domestic prices. And in the Ukraine, there are rumours that new scrap export quotas will be issued soon – a move which would end what is regarded as an unofficial export ban. Other problems remain, including delays in payments from steel mills.

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