Page 22 from: November 2015

B I R P R A G U E

Making the best of it
In the circumstances, Tom Bird of UK-based Mettalis Recycling did his best to be upbeat in
the global scrap market analysis he presented to
the BIR ferrous division meeting in Prague.

With ever-cheaper Chinese billet exports having
already been squarely blamed by divisional
president William Schmiedel of Sims Metal
Management for the recent slump in ferrous
scrap values, Bird pointed to evidence that
governments previously unwilling to put up
tariffs against this billet ‘are now starting to act’.
And he added : ‘It is early days but with huge
losses in the state-owned Chinese steel sector
attracting the attention of Beijing, international
pressure and countries now taking a more
aggressive stance to Chinese steel products, this
can only be of benefit moving forward.’

Simply not sustainable
The need for a change in approach by China was
clear, according to Bird. ‘Producing steel at the
current rate and pricing it accordingly is simply
not sustainable long term,’ he insisted. ‘There
needs to be a significant reduction in produc-

tion as well as cost-
cutting measures.’ In
this same context,
Schmiedel had earlier
quoted the chairman
of a major Chinese
steelmaker as saying
that the country’s
steel industry had run
up losses of US$ 2.8

billion for the first eight months of 2015.
Optimism again to the fore, Bird went on to
point out that the far lower scrap prices had
tempted some buyers to look anew at this raw
material option. ‘There are scrap consumers,
many who have been away for months, enquir-
ing about availability and price levels,’ he told
delegates. And with steel scrap arisings gener-
ally in decline and down by as much as 30-40%
in the EU, he concluded: ‘There is very little
overhang in the market – which can only help
levels as we move to the winter months.’
Schmiedel’s message was similar: ‘The good
news is that the lower prices we are experiencing

today should enable our customer base to again
start to look at ferrous scrap as a reasonable,
viable and economic option.’

Import surge for India
India’s imports of steel scrap jumped almost 30%
year on year to 3.168 million tonnes in the open-
ing half of 2015, according to the latest ‘World
Steel Recycling in Figures’ update presented in
Prague by divisional statistics advisor Rolf
Willeke (further details are in the ferrous market
report of this issue of Recycling International).
And Bird was able to confirm that the Indian
market (along with Pakistan) had continued to
provide exporters with a welcome fillip by
remaining ‘very active’ over recent weeks.
Sunil Barthwal, joint secretary of India’s ministry
of steel, had even more encouraging news to
impart: plans were for
the domestic steel
industry to increase its
annual scrap con-
sumption from 32
million tonnes in 2014
to around 56 million
tonnes within 10
years. Since India was
not close to self-suffi-
ciency, annual scrap imports would need to surge
from around 5 million tonnes last year to 10 mil-
lion tonnes as early as 2020.
Asked why India imposes a 2.5% duty on scrap
imports, Barthwal turned the question around
by saying: ‘The duty on scrap as a raw material
is at the minimum level and we are not going to
raise it.’

By Ian Martin

Ferrous

Tide turning against China’s steel industry
Putting her own slant on the impact of China’s
steel export surge on current market conditions,
the BIR ferrous division’s guest speaker noted that
the billet-to-scrap spread had been typically US$
20-40 per tonne since 2009 but had achieved a
minus value of around US$ 10 in September.
When all the customary relationships got
disturbed in this way, the results were generally
‘painful’, delegates in Prague were
told by analyst Becky E. Hites of
US-based Steel-Insights LLC.
However, she also believed that
sentiment towards the steel
industry was changing in Beijing
and that the Chinese government
was no longer interested in
underwriting a polluting industry

to help people make money. ‘The tide has turned
against the accommodating policies for the steel
industry,’ she added.
But the upheaval taking place in China would
present challenges globally, according to Hites.
‘The world has changed,’ she insisted ‘You need
to look at how your world has changed and how
you need to work in your new world. It’s not going

to be business as usual.’
On a brief statistical note, Hites
observed that US scrap exports
were 40% below their 2011 peak
and down 17% year on year in
January-August 2015 – despite an
increase in shipments to five of its
top 10 outlets, namely Turkey,
Mexico, India, Vietnam and Peru.

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Sunil Barthwal:
duty on scrap at the
minimum level.

Becky E. Hites: changing
sentiment in Beijing.

Tom Bird: reduction
in production needed.

20 October 2015