The steel scrap recycling industry 'seems to be in the process of restructuring' - which is 'good news', according to Christian Rubach, president of the BIR Ferrous Division. He bases his assertion on merger and acquisition activity that has 'never been more intense'. Some high-profile companies appear to be looking to de-invest and are 'trying to get rid of their steel scrap recycling activities', he points out.
In Europe, competition for material is said to remain 'very strong', with many operators still thought to be at only 50% of normal capacity. Margins are under pressure and some larger companies are reviewing their operations and closing yards. In the near term, the steel scrap market is expected to move sideways to perhaps slightly downwards ahead of a ‘stronger’ second half to the year.
In the USA, trade opinion was generally anticipating May pricing close to April levels. In the Pacific Rim, meanwhile, deep-sea scrap cargo purchases by Taiwan have been 'sporadic' while elections in Indonesia are prompting some steelmakers to delay scrap import purchases.
The H-2 scrap price in Japan slumped 27% from Yen 37 500-38 000 per tonne in December to Yen 27 500-28 000 in mid-March. It subsequently rebounded 15% to Yen 31 500-32 000 per tonne owing to increased enquiries from Taiwan and Vietnam, but has since been flat. Usually, mills are active in procuring scrap ahead of the long holiday in late April/early May, but this year they have reduced their production such that the supply-demand balance has not tightened.
Leading producer Tokyo Steel cut its production by 20% in April and continued trimming output during the holiday owing to ‘stagnant’ steel movements. Ferrous scrap imports into India totalled 6.9 million tonnes in the 12 months to March 30 last year but only 3.1 million tonnes in the ensuing nine months - a drop of more than 40% year on year.
The steep decline is attributed to: import duties levied on ferrous scrap; higher generation and consumption of domestic heavy melting scrap; a partial lifting of bans on iron ore mining; and poor domestic demand. The substantial correction in international ferrous scrap prices in the first quarter of 2014 led to 'increased interest from Indian mills for containerised scrap', with four or five deep-sea bulk cargoes sold to east and west coast ports 'after a gap of many months'.
In Russia, domestic scrap prices are expected to remain reasonably flat while the weak ruble is supporting all export-oriented industries, including the metallurgical one. Lower freight rates have also helped exporters. The domestic market in Ukraine is well balanced and the local currency, the grivna, has devalued by a factor of almost two, thus also supporting export-led industries.
Steel scrap exports are moving well but are still limited by quotas. The fifth edition of the BIR Ferrous Division's statistical report 'World Steel Recycling in Figures' reveals a 1.8% increase in worldwide steel scrap use to around 580 million tonnes last year but a sharp 9.5% decline in global external steel scrap trading to 99 million tonnes; the total includes EU-27 internal steel scrap exports which totalled 28.936 million tonnes last year for a drop of 4.5% over 2012.
Overseas scrap shipments from the USA fell 13.6% to 18.495 million tonnes while EU-27 exports tumbled 14.1% to 16.826 million tonnes. Leading importer Turkey slashed its overseas purchases of steel scrap by 12% to 19.725 million tonnes last year, while steep import reductions were also recorded by the Republic of Korea (-8.6% to 9.26 million tonnes), India (-31.1% to 5.636 million tonnes), China (-10.2% to 4.465 million tonnes) and Taiwan (-10.1% to 4.453 million tonnes).
Steel scrap consumption declined in the EU-27 (-4.6% to 89.9 million tonnes), Turkey (-6% to 30.4 million tonnes) and Russia (-3.5% to 19.4 million tonnes) but climbed in China (+2% to 85.7 million tonnes),Japan (+3.2% to 36.7 million tonnes) and the Republic of Korea(+0.3% to 32.7 million tonnes), while remaining unchanged in the USA despite a 2% drop in steel output.
According to China’s Ministry of Industry and Information Technology, new policies should provide a processing and distribution system to boost usage of domestic steel scrap at the expense of imports. Meanwhile, an extrapolation of three months of World Steel Association data suggests the world will apparently consume 15 million tonnes more purchased scrap this year when compared to 2013.
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