Ferrous scrap markets around the world are holding up despite the uncertainty caused by trade disputes involving the US, China and Turkey, according to the Bureau of international Recycling (BIR).
The sentiment is report in the latest quarterly BIR Mirror on the ferrous division with interim president Tom Bird noting that a sudden drop at the beginning of August was quickly corrected as the market recovered.
‘In September, most European markets have seen a small reduction based on the pre-recovery export prices of August. It is a similar situation in the USA where the domestic market is seeing reductions on most grades for September,’ he writes.
Bird also notes that the Indian sub-continent and Asian markets have seen ‘a little more activity over recent weeks’ which has helped European and US shippers.
‘It is fair to say that flows of scrap have adapted to the pressures on the traditional markets. Most domestic markets are anticipating an improvement across the board for October,’ he adds, noting that the potential for escalation in the trade disputes creates uncertainty.
‘Fundamentals good in the US’
Board member George Adams, of SA Recycling, says the US scrap market settled as expected in August with downward prices driven by a strong supply of scrap and a market not supported by export prices.
‘Export prices appear to be levelling off and will not provide enough support in the short term to push up US domestic prices; however, they do support current scrap prices,’ he says. ‘If scrap supplies decrease in the coming months, that may apply upward pressure to prices later in the fourth quarter. While nothing is definite, fundamentals remain good for both new steel and scrap within a healthy US economy.’
EU order books ‘well-filled’
‘But European mills’ order books remain well-filled as the economy appears to be very robust amid the growing turmoil of international trade conflicts,’ he says.
Fellow board member Frank Heukeshoven of TSR Recycling GmbH reports the EU market remained ‘quite stable’ in the first two months of the third quarter, with prices going sideways in July and a slight downward correction in August.
China scrap usage surges ahead
In his regular report, statistics advisor Rolf Willeke notes that in the first six months of 2018, there was a 105% surge in steel scrap usage for crude steel production in China, up from 62.2 million tonnes last year to 127.6 million tonnes.
This sharp increase is attributed to the Chinese government establishing stricter environmental quality standards and higher pollutant emission standards for the steel industry.
‘To meet these new thresholds and in order to avoid production restrictions, most basic oxygen furnace mills have actively increased their scrap input, with their steel scrap/crude steel ratio said to have been 20-25%. In addition, many new electric arc furnaces are being installed or are in the pipeline for the near future,’ Willeke says, expecting further investments in steel scrap processing including shredder capacity.
He also notes that China has not reported steel scrap export or import figures since April this year.
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