BIR Autumn 2022: Shifts in ferrous market still underway

Increased ferrous scrap demand on the Indian subcontinent and in the Middle East combined with a cutback in scrap collection in Europe has changed trading patterns this year. That was one of the overriding messages from speakers at the Ferrous Division meeting at the Bureau of International Recycling (BIR) Autumn Round-Tables event, which took place in Dubai, United Arab Emirates (UAE), in mid-October.

Sanjoy Kumar Ghosh, head of supply chain management of Bangladesh Steel Rolling Mills Limited (BSRM), told attendees major new infrastructure projects and growing purchasing power with Bangladesh’s GDP expected to rise 7.2 percent this year can be considered drivers of scrap demand there.

Along with guest speaker Lee Allen of the Fastmarkets metals information service, Ghosh said scrap importers in Bangladesh and the Indian subcontinent are switching to bulk vessel imports. In Bangladesh, inbound ferrous scrap bulk volumes have moved from roughly parity with container scrap in 2020 to a 68/32 split in the previous financial year and a 70 percent bulk/30 percent containerized ratio most recently, Ghosh said.

Salam Al Sharif of the Sharif Metals Group in the UAE said the region’s steel industry had been transformed. “We have shifted from an export-orientated region to almost becoming a net importer,” he said. “Demand is gearing higher and expansion in our steel mills is expected to increase three- to four-fold in the next five years."

Regarding scrap generation and demand in Europe, Ferrous Division President Dennis Reuter of Germany-based TSR Recycling GmbH said, “Inflows are not that high, to put it mildly, and we are really struggling to secure material. Due to energy prices, demand from the steel mills is not that great.”

“What a difference a year makes," Allen added. "Healthy recovery in the EU and across the European continent has given way to cuts in capacity utilization. It’s been a year when Turkey has struggled to consume [scrap], and those volumes have been replaced by South Asian buying. It’s an enormous change of fortune.”

Against a backdrop of a 20.2 percent year-on-year fall in Turkey’s steel production in July 2022 and a 40.9 percent year-on-year slump in ferrous scrap imports in July, Allen reported that demand for finished steel in the region has been poor, saying, “These trends do not come without consequences for scrap sellers across the world.”

While higher energy costs and lower demand have played their part, Allen said Russia’s invasion of Ukraine had been “a large contributing factor” in lower prices for scrap. Unable to sell in many markets because of sanctions, Russian steel billet traders had turned to Turkey, offering cut-price deals.

Allen said that while billet from Russia had rarely flowed into Turkey at a rate of 50,000 metric tons per month before the conflict, in May the monthly figure reached above 200,000 metric tons. He said it was no coincidence that Fastmarkets’ cost and freight (cfr) Turkey heavy melting steel (HMS) ferrous scrap price average had dropped from $631 per metric ton in April to slightly more than $350 per ton in September, as the billet competition muscled in.

Regarding bulk ferrous scrap shipments into India, Allen said traders in that nation are taking positions in large cargoes of bulk scrap to sell to the local market, where it is broken up and distributed while retaining margins. “Last year we could not have predicted this,” he said.

Overall, Allen said Fastmarkets forecasters were bullish on steel scrap and “fairly bearish” on steel. Reuter concluded the session on a bright note by reminding attendees of the increasing customer and consumer pressure for “green” steel using scrap, which suits BIR members.

“The primary producers of steel need us recyclers to bail them out,” Reuter said. “They will need all the [scrap] metal they can get their hands on. There is a reasonably good synergy between the consumer and the supplier [on this], so it could be a happy family over the next few years.”

The BIR Autumn Round-Table Sessions took place at the Intercontinental Festival City in Dubai.