Traders benefit while the sun shines

Sustained strong demand for scrap from rejuvenated economies should continue this year – but cannot be assumed to last forever.

The impact of the pandemic and China’s changing approach to imported scrap continues to generate uncertainty in the markets. Even so, 2021 continues to be a strong year for scrap businesses with iron ore and new steel prices hitting record highs earlier.

A pragmatic view of recent months came from Greg Schnitzer in the latest Mirror from the Bureau of International Recycling. The president of BIR’s ferrous division thought the global scrap market ‘felt like the new crypto-currency’ but he quoted the caution of a trader who said: ‘A rising market never goes in a straight line’.

‘It’s so true,’ he wrote. ‘We’ve become used to this bullish market, even expected it to continue without any signs of weakness. Let us neither forget that China was a huge catalyst for this strength nor underestimate the tremendous amount of stimulus money put into many other markets. All of this has added to the strength of the scrap market today, and discussions of future projects in such areas as infrastructure.

‘All of this is great, but there will be small dips, large corrections and the like. We’ve seen it many, many times before: we’re no different to any other commodity or even crypto-currency.’ Although many countries including India have suffered fresh waves of Covid-19, economies are generally getting back on their feet. With China resuming large-scale of imports of ferrous scrap this year (over 220 000 tonnes by the end of May), markets seem generally set fair for the months ahead.

Strong markets

By the end of June, prices for HMS 1/2 80:20 cfr Turkey had declined somewhat but remained close to US$ 500 per tonne. As a result, Fastmarkets reported, European exporters were more likely to deliver their cargoes more locally because of higher prices paid by steelmakers across Europe. Reports that US exports prices would ease in July were met with the response that this was prompted by mills talking down demand.

Export prices for Japanese scrap had increased in late June on improving demand for high-grade material in Japan and South Korea. An interesting development came from Russia where the Government announced temporary export duties on 340 steel and non-ferrous metals sold outside the Eurasian Economic Union.

Effective from 1 August until the end of the year, the base rate for the duty will be 15%, with a specific rate of US$ 150 per tonne on ferro-alloys. 

Read the full ferrous market analysis in this issue of Recycling International.