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.
Despite ongoing uncertainty in Ukraine, all of the country’s steel mills – even those in the Donetsk region – are said to be ‘operating well and generating profits’ because the weak domestic currency is stimulating export sales. At the same time, Ukraine’s steel scrap imports are virtually at zero because its main supplier, Kazakhstan, has prolonged its export ban.
In Russia, meanwhile, mills are holding healthy order books and have no plans for production cuts while steel scrap exporters have benefitted from a generally weak ruble. According to year-on-year comparisons for the first quarter, the weakness of its currency helped Russia to boost its steel scrap exports by 28.4% to 854 000 tonnes in 2014. A seasonal decline in scrap collections is now anticipated in some regions owing to the start of the grain season – an event which is also pushing up freight costs. The Turkish market remains strong for finished products and, as a result, dollar price levels are holding up despite the arrival of Ramadan in late June.
Many EU member states are under pressure because of the recent highs recorded by the Euro and sterling in relation to the US dollar, something which is expected to impact on settlement prices for July. In the USA, meanwhile, trade opinion is anticipating higher pricing for scrap this month.
In Asia, concerns in Japan that the recently-imposed sales tax increase from 5% to 8% would have a deep adverse effect on the steel industry and wider economy have proved largely unfounded: public works and the automotive and shipbuilding industries are described as ‘firm’ while domestic crude steel production in the second quarter amounted to 27.7 million tons – only a fraction short of the original forecast of 27.8 million tons. As regards the export market, mills in South Korea have replaced their counterparts in Vietnam and Taiwan as the dominant buyers of Japanese steel scrap since mid-May.
However, some steelmakers in South Korea are said to be reorganising their finances following ‘too many years of difficult business conditions’. Vietnam and Taiwan had been keen buyers of Japanese scrap between February and April this year, but the steel product markets of both countries are said to be depressed owing to cheap imports from China.
Japan’s steel scrap export market is now expected to enter a consolidation phase unless US scrap prices head higher or the Yen loses even more ground on the foreign exchanges. Indian activity in the international steel scrap market has been muted for some time; indeed, the country’s imports plummeted 45% from 6.9 million tonnes in the year to March 31 2013 to just 3.8 million tonnes in the ensuing 12 months, partly as a result of import duties on ferrous scrap and a slow overall economy. Indian mills bought significantly more scrap towards the end of May and in early June this year, although this is said to have had ‘more to do with domestic iron ore availability issues rather than with strong demand for steel’.
Meanwhile, there is now widespread optimism within India that the new government will focus on economic growth and infrastructure projects. The latest ‘World steel recycling in figures’ update reveals that, when compared to January-March 2013, Chinese imports of steel scrap slumped 56% to just 561 000 tonnes in the first three months of 2014 – ‘thus underlining the country’s new policy to buy more steel scrap from domestic sources and to reduce imports’ but also the influence of a drop in iron ore prices. Overall, China increased its scrap usage by 1.8% to 23.1 million tonnes in this year’s opening quarter.
Meanwhile, the EU-28 overtook the USA as the world’s leading steel scrap exporter in the opening quarter of this year. While the EU’s overseas shipments edged only 0.5% lower year on year to 3.958 million tonnes, US exports tumbled 36.3% to 3.431 million tonnes. Based on an extrapolation of five months of World Steel Association data, the world this year is on course to produce 62 million tonnes more raw steel and 34 million tonnes more iron than in 2013, while apparently consuming 28 million tonnes more purchased scrap.
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