Global – All in all, 2015 was a year of demand contraction across the entire commodity spectrum – from oil to ferrous scrap. As a result, commodity prices are now at levels last seen during the period from 1999 to 2002 – ‘and yet our costs are exponentially higher than at that time’, laments BIR ferrous division president William Schmiedel.
But on the plus side, he adds, the central government in China is starting to focus on supply-side reform in all sectors ‘and it is my belief that steelmaking will certainly be one of the first to be addressed’. Beijing has formally announced the industry intends to cut annual crude steel production capacity by 100-150 million tons, although it has been estimated that these proposed cuts would need to be doubled for the world steel industry utilisation rate to regain a relatively normal level.
As emphasised throughout the BIR World Mirror, the Chinese steel industry’s overproduction and exports had a huge impact on world markets in 2015 – and continue to do so. Bulk scrap sales into South Korea, for example, remain ‘sparse’ because of weaker steel demand and the competition from cheaper Chinese products.
Having jumped almost 7% to 7.847 million tonnes last year, scrap exports from Japan are not expected to increase much in 2016, yet again because demand from South Korea – the biggest buyer of Japanese scrap – is thought likely to continue in decline. In Japan itself, meanwhile, scrap consumption by electric arc furnace mills is forecast to maintain the same level as in 2015 ‘or even to increase slightly’ given expectations of a gradual recovery in domestic demand.
Demand for steel scrap across the EU has remained slow, with the flow of Chinese semi and finished products blamed for continuing to dampen scrap bookings and prices; certain operators are still reporting capacity levels ‘some 40-50% below optimum’ and a number of yards and businesses have had to close. As a response, the EU will be imposing new tariffs ranging from 9.2% to 13% on Chinese imports of steel bar used in construction, a move which is expected to benefit major scrap consumers such as Celsa, Riva and Arcelor.
Mills and traders in India were quite active in the international scrap market late last year, with some 12 to 15 deep-sea cargoes booked over the October-December period. January, meanwhile, provided ‘a breath of fresh air’ for scrap dealers in the USA with an uptick in domestic mill orders and modest increases in US scrap prices. ‘Winter weather and low scrap prices have impeded flows into dealers’ yards,’ it is pointed out.
In Russia, the weak ruble has helped steel mills and other exporters ‘but its influence has been limited by the generally weak international market’. Furthermore, winter ice class limits in the Azov Sea ‘have had a negative effect on scrap shipments this year’. Steel scrap collections in Ukraine were ‘extremely low’ last year at 4.3 million tons while exports jumped by some 300 000 tons to 1.217 million tons – an effect of the closure of some steel mills in the eastern part of the country.
In the wider ‘World Steel Recycling in Figures’ update provided by divisional statistics advisor Rolf Willeke, it is noted that the EU-28 – the world’s leading steel scrap exporter – recorded a 21.3% drop in overseas shipments to 10.229 million tonnes in the opening nine months of last year, keeping it just ahead of the USA whose exports declined 13.9% to 9.983 million tonnes.
Lower overseas shipments of steel scrap were also registered by Canada (-20.7% to 2.692 million tonnes), Australia (-16.4% to 1.402 million tonnes) and South Africa (-9.6% to 1.005 million tonnes). Turkey, the world’s leading steel scrap importer, reduced its overseas purchases by 17.9% year on year to 12.048 million tonnes whereas India upped its imports by 15.7% to 4.699 million tonnes.
Steel scrap usage fell in all key countries and regions in January-September last year – with the exception of the EU-28 where a 0.5% increase was recorded to 69.5 million tonnes despite a 0.3% dip in crude steel production. From the year-on-year perspective, scrap usage fell 7.3% in China, 8.2% in the USA, 10.7% in Japan, 7.8% in South Korea, 13.1% in Turkey and 5.3% in Russia. ‘In all these individual cases, the drop in scrap usage was sharper than the decline in crude steel production,’ Mr Willeke observes.
This article is based on the latest Ferrous World Mirror produced by the BIR world recycling organisation for the benefit of its members.
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