Page 31 from: November 2012

31November 2012

‘Chicken and egg’
During his address to the BIR Ferrous Round-

Table, Mr Oppenheimer also confirmed that

Stemcor – which turned over around US$ 10

billion last year and handled some 18 million

tonnes of steel and raw materials, trading

approximately 1.5 million tonnes of ferrous

scrap – would like to grow its scrap activities

and invest in processing facilities.

And the keynote speaker also attempted to settle

the age-old ‘chicken and egg’ argument over the

leading influences affecting scrap and steel pric-

es. ‘Supply and demand for scrap are the key

determinants of steel prices,’ he asserted. ‘Causa-

tion goes from scrap prices to steel prices, not

the other way round, though steel prices are also

affected by other economic factors.’ When scrap

supply is reduced in the winter, ‘scrap prices go

up and steel prices follow’, he noted. ‘Scrap pric-

es impact steel prices – not the other way round.’

Dynamics ‘about-turn’
Of course, the possibility of hearing informed

scrap price projections is what attracts many

delegates into the meeting rooms at BIR Conven-

tions. And in Barcelona, the country/regional

market reports delivered to the Ferrous Round-

Table certainly reflected some positive sentiment.

The President of the European Ferrous Recov-

ery & Recycling Federation (EFR) – Tom Bird

of Van Dalen Recycling UK – insisted that ‘the

Keynote speaker Ralph Oppen-
heimer, Executive Chairman of
London-based international
steel trading company Stemcor:
‘The steel industry is not a
happy place at the moment.’

BIR Ferrous Division President
Christian Rubach of Germany-
based TSR Recycling laments
that companies ‘are facing
enormous uncertainties’.

President of the European Fer-
rous Recovery & Recycling Fede-
ration (EFR) Tom Bird of Van
Dalen Recycling UK: ‘Prices in
the EU markets should remain
relatively stable and not fall
further.’

Blake Kelley of Sims Metal
Management in the USA: ‘Eco-
nomic uncertanties continue to
keep buyers cautious.’

vided his now-familiar extrapolation of World

Steel Association data. Using figures from the

first nine months of this year and comparing

them to those of 2011, it can be projected that,

in 2012, the world will produce 29 million

tonnes more raw steel and 26 million tonnes

more iron while apparently consuming 3 mil-

lion tonnes more purchased scrap.

Recovery ceiling
In his report on the Japanese market, Hisatoshi

Kojo of Metz Corporation confirmed that

Tokyo Steel – dubbed ‘the price-setter’ in Japan

– cut its scrap purchasing price 13 times

between mid-August and mid-October by the

combined amount of Yen 5000 per tonne

(US$ 63). By October 19, the steelmaker’s buy-

ing price for H2 scrap was Yen 24 000 per tonne

(US$ 303.80) for seaborne arrivals at its Okaya-

ma works and Yen 23 000 (US$ 291.14) for

deliveries by truck to its Utsunomiya works.

After the Chinese holidays in early October, some

of the country’s steel mills entered the market for

the first time in several months and bought

around 400 000 tonnes of scrap from, among

others, Japan. In response, South Korean steel

mills have started to procure December shipment

final quarter for 2012 should prove to be better

than the previous three quarters’ and that

‘prices in the EU markets should remain rela-

tively stable and not fall further’. A continuation

of ‘active’ scrap buying in Turkey and recent

Chinese attempts to push up steel prices were

identified as factors in the ‘improvement in the

market over the last week or so’.

Amid the ‘challenging conditions’ witnessed

since this year’s BIR Spring Convention in

Rome, the world’s biggest scrap importer, Tur-

key, has seen ‘a complete about-turn’ in the

dynamics of its markets such that ‘the rebar

price is now determining the price of scrap

rather than the price of scrap determining the

price of rebar’. With its excess of production,

China is ‘flooding’ established Turkish markets

with rebar at levels well below those at which

Turkey would wish to supply. ‘As Turkey is

being squeezed out of its traditional markets,

this will undoubtedly affect traditional EU

markets as Turkey looks to replace sales,’

explained Mr Bird. ‘This will then further affect

the state of the EU market.’ Steel demand is

‘particularly low’ in southern Europe, he added.

Higher values ‘already evident’
Blake Kelley of Sims Metal Management in the

USA contended that ‘industry prospects appear

more stable and positive at the moment’,

although ‘economic uncertainties continue to

keep buyers cautious, which naturally limits

inventory accumulation’.

Reporting specifically on his home market, he

noted that domestic dealer scrap prices fell

US$ 40-60 per ton for early October before

rebounding around US$ 25-35. With yard col-

lection volumes generally as much as 25%

lower, the trade expects November dealer pric-

es to increase – with some higher values ‘already

evident’. On the downside, US raw steel produc-

tion fell to only 69.7% of capacity in the penul-

timate full week of October, it was reported.

Turning to the Pacific Rim, Mr Kelley hailed

China’s recent strong return to the deep-sea

bulk cargo scrap import market ‘after a long

absence’ whereas South Korea’s deep-sea pur-

chasing activity ‘has recently been slower than

usual’. ‘Fairly active’ is how the speaker

described the South East Asian market,

although ‘Thailand has been quiet lately’. He

also pointed to steelmaking expansion plans in

Indonesia, Malaysia, Thailand and Vietnam.

In his concluding comments, Mr Kelley pro-

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