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BIR Ferrous Metals World Mirror February 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.

The first nine months of 2012 produced a steep downturn in scrap consumption among steel mills in China. In his latest ‘World Steel Recycling in Figures’ report, the BIR Ferrous Division’s Statistics Advisor Rolf Willeke notes that the nation consumed 60.6 million tonnes in January-September last year – or almost 17% less than in the first three quarters of the previous year. Its imports of steel scrap suffered an even sharper fall of 18.4% to 3.896 million tonnes.

Making the same nine-month comparison, the EU-27, Japan and Russia cut their steel scrap usage by, respectively, 6.7%, 3.2% and 3.4%. However, Turkey and the USA provided a partial counter-balance, with the former boosting its steel scrap consumption by 9.7% to 24.735 million tonnes and the latter recording a usage hike of 2.2% to 42.5 million tonnes when compared to January-September 2011.

Despite its overseas shipments dropping 10.7% to 16.938 million tonnes in the first three quarters of last year, the USA remained the world’€™s leading exporter of steel scrap – even though the EU-27 closed the gap with a year-on-year increase of 7.3% to 14.791 million tonnes. Japan’€™s steel scrap export volumes jumped 64.4% to 6.173 million tonnes in the first nine months of 2012.

Turkey remained the leading global importer of steel scrap with a 7.7% increase in its overseas purchases to 16.856 million tonnes. Among the other significant import performances, the Republic of Korea bought in 7.751 million tonnes of steel scrap in January-September 2012 for a year-on-year upturn of 20.4% while purchases made by India on the international market soared 53% to 6.233 million tonnes when making the same comparison.

According to Christian Rubach, President of the BIR Ferrous Division, 2012 was ‘€˜a difficult year for our industry’€™, adding that the global challenges it faces – ‘€˜such as overcapacity, trade barriers and export restrictions’€™ – are also ‘€˜far from being resolved’€™. He expresses a personal fear that 2013 will not bring a positive turn-round in fortunes within Europe and that ‘€˜its current plight may last into 2014 or even longer.’€™

Feedback on market conditions for Europe suggests container business out of the EU ‘€˜has picked up somewhat in January’€™, thus increasing the options available to EU suppliers and ‘€˜keeping up the market level in certain areas’€™. With a late-January worsening of weather conditions across much of the continent expected to tighten the squeeze on scrap arisings, the scope for downward price movements is seen as limited. ‘€˜Certainly, 2013 has started better than 2012 ended,’€™ it is maintained.

In the USA, domestic mill buying prices for dealer scrap were essentially unchanged moving from December into January, with prime grades attracting US$ 385-400 per tonne, shredded US$ 385-395 and HMS US$ 350-370 depending on location. Shipments to steel mills and collection volumes arriving in scrap yards had been ‘€˜fairly steady’€™ ahead of colder winter weather in the latter part of January.

In India, where ferrous scrap imports ‘€˜continue to increase year on year’€™, sales of shredded in containers have been concluded at around US$ 420-430 per tonne cfr Nhava Sheva. But the market for February is deemed to be ‘€˜uncertain’€™, with most international scrap markets ‘€˜not showing much strength’€™. In scrap import terms, China has been a slightly more active buyer of deep-sea cargoes in recent weeks, adding to the volumes it has continued to source from Japan.

In the early weeks of 2012, the domestic H-2 scrap price in Japan surged to Yen 33 000 per tonne (US$ 375) – far removed from the lows of Yen 23 000 recorded in October last year. This steep upturn is attributed in part to ‘€˜the rapid depreciation of the yen and the hike in iron ore prices’€™. However, it is also noted, there has been a subsequent downward price correction of US$ 10-20 per tonne. Meanwhile, Japanese steelmakers are reporting ‘€˜some signs of recovery’€™ in both price and demand for their products, boosting mill operating rates and prompting predictions that any further downward adjustment in the scrap price will be limited.

Also described as ‘€˜limited’€™ are steel scrap offers in Russia – a common feature of the winter months. Steel producers in Ukraine, meanwhile, are ‘€˜much more dependent on exports of final products than their Russian counterparts and so they were under pressure for the whole of last year, especially the EAF mills’€™, it is reported. Some cut their production while others have suspended operations. ‘€˜This year will also be quite difficult,’€™ it is asserted. Furthermore, an ‘€˜unofficial ban on steel scrap exports’€™ is said to exist in Ukraine given that no new export quotas have been issued to date.

The recently-released annual statistics from the World Steel Association suggest that, when comparing 2012 with the previous year, the world produced 18 million tonnes more raw steel and 12 million tonnes more iron while apparently consuming 6 million tonnes more purchased scrap.

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