BIR Ferrous World Mirror May 2016

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.

A ‘momentous’ few months for the ferrous scrap market have seen prices leap more than US$ 140 per tonne, thus replacing the ‘unsupportable’ conditions of earlier in the year when collections ‘broke down at the foundation level’ to the point of being ‘no longer economically feasible’. The scrap industry ‘is on a much sounder footing’ following this price surge ‘but we are clearly not out of the woods yet’, cautions BIR ferrous division president William Schmiedel of Sims Group Global Trade Corporation.

By turning its attention from China-sourced billet to scrap, Turkey helped push the market beyond US$ 300 per tonne in a short space of time. Nevertheless, buyers remained ‘circumspect’ despite the market increasing rapidly and ‘weren’t exactly chasing suppliers to conclude’, the Mirror reports.

The EU domestic market is seeing further price increases of around Euro 40 per tonne for May. Meanwhile, container trade out of the EU was very active in February and March but has since slowed as buyers in the Indian Sub-Continent sit back to see how the market develops’. Buyers and traders in India ‘got in when the market was low and completed their purchases before the current price boom’, it is explained. But despite the pause in their buying activity, ‘they will need to import scrap in the coming months’.

In the 10 months to the end of January this year, India imported some 5.1 million tonnes of ferrous scrap. The figure is forecast to exceed 6 million tonnes for the 2015/16 financial year as a whole, which would equate to a leap of more than 20% when compared to 2014/15.

The market in the USA has continued to show ‘strong’ improvement given tight scrap supply and slightly improved demand. ‘May will be another month of US scrap price gains,’ it is asserted. In Russia too, the market is in recovery ‘following a long period of stagnation’, with good demand for scrap and collections ‘going well’ while export yards are enjoying the benefits of a weak ruble, low freight rates and firm demand from Turkish customers.

The government in Ukraine, meanwhile, has succeeded in implementing a Euro 30 per tonne export duty on steel scrap.

For Japan, the steel scrap export market has jumped around 80% in price terms over the past three months, a phenomenon attributed mainly to ‘the Chinese government’s announcement of a reduction in its country’s steel production capacity ranging between 100 million and 150 million tons by 2020’. Demand for steel products in Japan is expected to increase from the second half of the 2016 fiscal year as many construction projects related to the 2020 Tokyo Olympic Games will finally begin.

In 2015, scrap usage in world steel production fell by 30 million tonnes – or just over 5% – to around 555 million tonnes, according to the BIR’s latest ‘World Steel Recycling in Figures’ update. Meanwhile, the proportion of scrap used in global crude steel production fell to 34.2% from 35% in the previous year.

Turkey, the world’s foremost steel scrap importer in volume terms, slashed its overseas purchases by 14.8% last year to 16.251 million tonnes while import reductions were also recorded by, among others, South Korea (-28% to 5.758 million tonnes), Taiwan (-21% to 3.373 million tonnes), China (-9.2% to 2.328 million tonnes) and Indonesia (-52.3% to 1.02 million tonnes). On the plus side, there was an upturn in foreign supply to India (+17.7% to 6.71 million tonnes), Mexico (+62.1% to 1.483 million tonnes) and Belarus (+10.3% to 1.382 million tonnes).

Global external steel scrap trade – including internal EU-28 trade – amounted to 86.6 million tonnes in 2015, which was equivalent to a year-on-year decline of more than 13%. EU-28 scrap exports slid almost 19% last year to 13.743 million tonnes while overseas shipments from the USA fell 15.4% to 12.976 million tonnes. In contrast, sizeable export increases were posted by Japan (+6.9% to 7.847 million tonnes) and Ukraine (+31.6% to 1.213 million tonnes).