BIR Autumn Round-Tables: Ferrous Markets Continue to Challenge

Ferrous scrap markets continue to be under pressure throughout the world, according to presenters at BIR event.

November 15, 2013
Recycling Today Staff
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Christian Rubach, president of the BIR (Bureau of International Recycling) Ferrous Division and an executive with Germany’s TSR Recycling, sketched out a less-than-optimistic outlook for ferrous scrap markets moving into the end of the year during the BIR’s Autumn Roundtable, held in Warsaw, Poland, Oct, 27-29.

Rubach said that when the BIR was last in Warsaw there was significant optimism about the European steel industry, especially in Poland.

“Six years ago the steel industry worldwide was booming and outlook was great,” Rubach said. “Today, six years later we have been through the so-called Lehmann crisis in 2008/2009 and again after a year of fantastic recovery in 2010 many of us feel as if we are in the next crisis.”

For Europe, the ferrous market is even more daunting. In Southern Europe, Rubach said, the situation is very bad and “even if we see now signs of stabilization this only means that it is not getting any worse, but it doesn’t mean it is getting better in the short term.”

As difficult as the ferrous scrap market is, Rubach added that the steel industry in the European Union and other OECD countries are in even worse shape. He noted that perhaps only two steel companies on the European continent are now profitable.

In analyzing markets in various regions of the world, Blake Kelly with Sims Metal Management, with U.S. headquarters in New York, noted that prices for a host of ferrous grades in the United States are holding at existing levels, despite the fact that analysts and market watchers earlier in the fall had expected prices for ferrous scrap to slump.

For China, Kelly said traders were expecting a market rebound for steel and raw materials after the national holiday, but imported scrap activity has been minimal as more domestic scrap supply is available.

In Korea, the ferrous market has been active,” Kelly noted. Domestic heavy melt steel (HMS) declined a bit, though steel production in Koreas has picked up.

In Taiwan, container scrap purchases have continued and there also has been some bulk cargo activity in recent weeks. The high price of imported Japanese scrap generally causes steelmakers to seek other origins.

India has been one of the bigger problem spots. The weak rupee (India’s currency), has caused imported scrap to become more expensive, which has priced some shippers out of the market, Kelly pointed out.

He also noted that the daily rate of world raw steel production increased 4.4 percent in September from August. Meanwhile, the world steel industry operated at 79.3 percent of capacity in September, which is up 3.4 percent compared to the same time last year.

Hisatoshi Kojo with Japan’s Metz Corp. noted that the Japanese yen has strengthened against the U.S. dollar, which has made Japanese ferrous scrap more expensive in the export market, resulting in fewer ferrous scrap contracts being signed.

Kojo pointed out that the rapid growth in the number of contracts for Japanese scrap export can’t be expected. However, the demand of restocking for the winter should emerge and the increased production at Japanese steel mills are forecasted even after October that the supply and demand balance in Japanese scrap markets should continue to be tight.

Discussing the ferrous markets in Russia and the Ukraine, Andrey Moiseenko with Ukrmet Ltd., Ukraine, said the Russian market in late autumn was well-balanced and stable. Prices have been holding up fairly well, though collection of the material, similar to other regions of the world, are down. He estimates that annual figures will be 10 to 15 percent lowered than figures the same time last year,

For the Ukraine, Moiseenko pointed out that domestic markets are not stable. “Export flows have increased due to new export quotas that have been distributed. It has put extra pressure on the market. Stocks were quite low in September, with some mills only having stock to last a few days.

Going forward, he pointed out that one electric arc furnace in the Ukraine came back on line after being idled for close to one year. The mill produces around 40,000 metric tons. At the same time, another mill has decreased its production rate from 40,000 metric tons to 10,000 metric tons.

In his market contribution, Tom Bird with U.K.’s Van Dalen Recycling noted that competition for ferrous scrap is fierce. “Volumes of material are still well down across the scrap sector with some operators reporting volumes still down as much as 50 percent in some areas.”

On a more positive note, Bird pointed out that during the second half of October the scrap sector was more buoyant. “Prices have moved up, and we have seen strong demand from the sector with levels up around $15-20. It is anticipated that the EU market for November will at least see a movement upwards equaling October’s price reductions.

“2013 has once again proved challenging for our sector, but the general outlook for the final quarter is more optimistic. Demand from the Eastern Mediterranean remains strong, and, with the onset of the winter months, supply will become tighter and this, coupled with the low inventory levels, should help the market.

“The container market, which fell well behinds due to the rupee, has now settled and we are seeing much more activity and interest,” Bird added.