Page 56 from: Out now: the summer issue!

market analysis

traders start the long
haul back
Sector looks to automotive industry returning from hibernation after pandemic

and ‘green’ steel offering longer-term growth.

56

a u t h o r Robin Latchem

The headline cfr prices for shipments
of HMS 80/20 heavy steel scrap from
the EU to Turkey nicely sum up recent
months. The February high of US$ 279
reported in the previous issue was
down to the US$ 240 level in April and
May before climbing back to US$ 252
in June. The margin between the low-
est and highest prices in April of nearly
US$ 50 – the widest for many months –
shows what rocky seas the world econ-
omies have been steering through.
Ferrous traders were not alone. Very
few industrial sectors have had a good

2020 so it is encouraging to report an
assurance from an expert in commodi-
ty markets that the ferrous scrap indus-
try ‘has great long-term prospects’
with a focus on more environmentally
friendly steelmaking driving greater
use of scrap.

GREEN STEEL
The analysis came from Renate
Featherstone, principal analyst at
Wood Mackenzie in the UK, during an
online forum on ferrous metals organ-
ised by world recycling organisation

BIR in early June. Featherstone said
steelmaking accounted for around 10%
of global carbon emissions and pro-
ducers were coming under mounting
pressure from governments to turn to
‘green’ steel. ‘The first logical step to
reducing emissions when demand is
growing is to recycle and reuse all
available scrap, she said. ‘Only when
we maximize scrap use do we signifi-
cantly reduce overall virgin iron pro-
duction and get emissions closer to
government targets. This is why scrap
is so important.’
In the current climate, she said, the
restrictions on scrap imports in China
had inflated prices, offering better
margins to operators of BOF rather
than EAF plants. Wood Mackenzie’s
projections suggested integrated
steelmaking would remain the main
source of steel in China over the next
two decades but predicted the share
of global steelmaking claimed by elec-
tric furnaces could rise to 30% by 2026
and then to 34-35% by the year 2040 –
potentially 52% outside of China and
India. ‘Even though there are difficult
market conditions today, the scrap
industry has great long-term pros-
pects,’ the analyst concluded.
Featherstone expected global crude
steel production to take at least five
years to recover to 2019 levels.

STEEL OUTLOOK
The World Steel Association (world-
steel) has forecast a 6.4% contraction
in steel demand this year because of
the Covid-19 crisis followed by a 3.8%
recovery in 2021. The figures are
included in the organisation’s latest
short-range outlook. Worldsteel
expects demand in 2020 to be 1 654
million tonnes (Mt) with the 6.4%
reduction mitigated by China recover-

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