Page 67 from: March 2012

67March 2012

Ferrous

The average price of iron ore is likely to
regain stability by June and then operate
around US$ 140 per tonne, according to
comments from Vale’s CEO Murilo Fer-
reira which were reported in Metal Bul-
letin. Prices are being dampened at
present by reduced construction activity
in China but will become more settled –
and may even rise – from the second half
of the year, partly on the back of con-
solidation of the Chinese construction
sector, fi xed iron ore output costs and
reduced exports from India, it is argued.
At Mining Indaba’s early-February con-
ference in the South African city of Cape
Town, it was predicted that world
demand for iron ore would effectively
double to approximately 3.5 billion
tonnes per annum by 2030. Magnus
Ericsson, a partner in Raw Materials
Group, also suggested that prices would
not drop below some US$ 118 per
tonne over those intervening years but
could go ‘much, much higher’, not least
because of Chinese steel demand.
World pig iron production climbed more
than 5% to an all-time annual high of
1.083 billion tonnes last year, according
to the World Steel Association (WSA).
Asia led the way by contributing
approaching 805 million tonnes to the
total for a year-on-year increase of more
than 6%; China boosted its production
by upwards of 7% to 629 million tonnes.
By contrast, EU-27 output was slightly
lower at just over 94 million tonnes.

Steel
Compared to January 2011, world crude
steel production in the 59 countries
reporting to the WSA was almost 10
million tonnes lower in the fi rst month
of this year. Many countries and regions
recorded output gains but these were
wiped out by a drop in Asian production
of 11.4% to 73.823 million tonnes and
a 5.6% decline in EU output to 13.92
million tonnes.
As ever, China was a major infl uence on
the grand total, with its crude steel out-
put sliding 13% from 59.871 million
tonnes in January 2011 to 52.072 mil-
lion tonnes in the corresponding month
of this year, according to an estimate

provided by the China Iron & Steel Asso-
ciation. The same comparison reveals a
10.6% drop-off in Japanese production
to 8.631 million tonnes and a 9.6%
year-on-year decline in South Korea to
5.12 million tonnes.

Eye-catching start
In contrast, US output of crude steel
increased 5.7% in January this year to
7.6 million tonnes while Turkey made
perhaps the most eye-catching start to
2012 with a production hike of 14.4%
to 3.135 million tonnes. Brazil recorded
a slender 0.6% increase to 2.78 million
tonnes when compared to January last
year, contributing to a South American
total some 1.4% higher at 3.798 million
tonnes. Production in Russia was also
higher – albeit by just 0.4% – at 5.948
million tonnes.
Elsewhere, crude steel production in
Africa/the Middle East edged 1.4%
lower in January this year to 1.549 mil-
lion tonnes, while Oceania suffered an
output slump of 37.5% from 733 000
tonnes in the fi rst month of last year to
458 000 tonnes this time round.
Compared to January 2011, the average
crude steel capacity utilisation rate of

EU steel order fi les ‘quite strong’

While the EU economy ‘probably slipped into a shallow recession in the fi nal
quarter of last year’, activity among downstream steel users has remained
‘rather fi rm’, according to the latest economic and steel market outlook from
European steel association Eurofer. The organisation’s Director General Gordon
Moffat says: ‘Companies will remain cautious for the time being, but there is no
indication that industrial orders will fall off a cliff. Order backlogs are quite strong.
The outlook for most steel users is relatively benign.’ EU apparent steel consump-
tion growth amounted to 7.2% last year despite a fall of more than 4% year on
year in the fourth quarter. This year has begun with reduced domestic and import
supply appearing to be balanced with softer demand, notes Eurofer. Mr Moffat
expects the market to ‘take a pause’ this year and record ‘only a very mild reduc-
tion in demand’, prior to real and apparent steel consumption strengthening
again in 2013. ‘The expected slight drop in real consumption and some destock-
ing will result in a reduction in apparent steel consumption of just over 2% year
on year,’ Eurofer states. Over the year, domestic deliveries are projected to sta-
bilise around the 2011 level, thus implying that imports will fall by around 11%.
Apparent steel consumption is then forecast to rise by almost 3% in 2013 – ‘on
a par with the trend in real consumption’, the organisation adds.

US scrap exports grow almost 30%

China increased its scrap consumption by almost 10% when comparing the
fi rst nine months of 2011 with the same period in 2010. However, the coun-
try’s crude steel production grew at an even faster rate, according to the
recently-released ‘World Steel Recycling in Figures’ update compiled for the
BIR world recycling organisation’s Ferrous Division by Rolf Willeke, its Statistics
Advisor. The increase in Chinese scrap consumption of 9.6% to 72.9 million
tonnes was exceeded in proportional terms by the 10.7% steel production
hike to 525.7 million tonnes. By contrast, increases in steel scrap usage in the
EU-27 (+5.7% to 76.8 million tonnes), the USA (+10.3% to 41.6 million
tonnes) and Turkey (+22.7% to 22.2 million tonnes) were greater than respec-
tive upturns in crude steel production of 4.3%, 6.2% and 18.9%, notes the
update, which is contained within the BIR’s latest Ferrous World Mirror.

Top importer
Turkey remained the world’s top importer of ferrous scrap in the fi rst three
quarters of last year following an increase of 15.3% to 15.65 million tonnes.
China’s imports climbed 4.2% to 4.77 million tonnes while South Korea’s
external purchases jumped 6% to 6.44 million tonnes. Among the biggest
year-on-year changes, Thailand’s overseas purchases surged 44.1% to 1.38
million tonnes while Vietnam upped its imports by 24.1% to 1.98 million
tonnes. Offi cial fi gures from India covering only the fi rst fi ve months of 2011
reveal overseas steel scrap purchases of 1.86 million tonnes – equivalent to
a year-on-year decline of 13.8%. The USA, the world’s leading exporter of
scrap, saw its overseas deliveries soar 28.2% to 18.96 million tonnes in the
fi rst nine months of 2011, thanks in large part to signifi cantly increased
buying interest from Turkey (+44.4% to 4.32 million tonnes), China (+44.5%
to 3.26 million tonnes) and Taiwan (+35.9% to 2.65 million tonnes). Turkey
also bought 7.43 million tonnes of steel scrap from the EU, representing a
year-on-year decline of 5.9%. Japan’s scrap export volumes declined by
23.1% to 3.76 million tonnes in the fi rst nine months of 2011, whereas
shipments from Russia sky-rocketed 83.8% to almost 2.77 million tonnes.

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