Walking in Place

February 26, 2013
RTGE Staff

The first two buying periods of 2012 have not produced dramatic changes in pricing. In many regions, as well, they have not brought about the larger volumes of scrap that recyclers would like to see.

In Italy, recycler Ruggero Alocci of Alocci Rappresentanze Industriali, Genoa, cites “weak scrap availability,” that, in his region, also is combined with “demand [that] remains slack on thin sales and short order books” at Italian steel mills.

In other parts of the world, however, steel mills are buying, which has created an active export market for recyclers whose local mills are not in the mood to buy.

After a fourth quarter of 2012 that was unexpectedly weak in both the United States in China, government transitions played out in their own ways with similar tensions for business decision-makers.

A better mood seemed to emerge in January, with the United States and China both reporting positive news on some important economic indicators, including construction activity in the United States and manufacturing activity in China.

Statistics from the American Iron and Steel Institute (AISI), Washington, do not point to this translating into an immediate gain for the steel industry, however. Steelmakers in the U.S. produced 1.80 million tons (1.63 million tonnes) of steel in the week ending Feb. 2, 2013. That figure is down 7.4% from the 1.94 million tons (1.76 million tonnes) produced in the comparable week of 2012.

Even compared in back-to-back weeks, output in the U.S. did not gain momentum, essentially staying flat compared to output the week before.

As of early February, recyclers in some regions of the U.S. are reporting tepid domestic demand as steel mills there operate at about 75% of capacity.

Writing for the Bureau of International Recycling (BIR) World Mirror January 2013 Ferrous Metals Report, Blake Kelley, based in the United States for Sims Group, said exports to South Korea and Taiwan have continued from the U.S. in early 2013.

The good mood referred to earlier may have taken hold in China, where Kelley writes that scrap imports began to increase in November 2012 (up 15% compared to November 2011) and “raw steel production increased 2.3% in the first 10 days of January from the prior period to an annualised rate of 710 million tonnes.”


Exporters could also look to Turkey in the first two months of 2013, according to Tom Bird’s report in the Mirror. Bird is president of the European Ferrous Recovery & Recycling Federation (EFR).

“After the holiday (Christmas and New Year’s) break, Turkey was very active, buying approximately 20 deep sea cargoes in the first week,” writes Bird in his report.

The bulk loads to Turkey have not been the only export market available in Europe, says Bird. “Container business out of the EU has picked up somewhat in January,” he also writes. “This has increased the options available to EU suppliers and is keeping up the market level in certain areas.”

When ferrous scrap recyclers in Europe can finally look forward to improved supplies of scrap and better demand from regional mills remains an open question.

New passenger car sales in December 2012 in Europe, according to figures compiled and distributed by the Association des Constructeurs Europeens d’Automobiles (ACEA, www.acea.be), amounted to less than 840,000 vehicles registered in the EU and EFTA (European Free Trade Association) area.

That is down some 15% from the nearly 1 million registered in December 2011 and down a similar amount from the 965,000 new cars registered in November 2011.

The construction industry in Europe is not bracing for an active 2013 either. In early February, France’s Vinci SA reported a drop in 2012 profitability and warned its investors not to expect a booming year in 2013 either.

“The economic climate is expected to remain difficult in 2013, especially in Europe,” the highway, rail and infrastructure company writes in the comments accompanying its 2012 financial results.

Vinci also says “the outlook for growth in [activity], which depends on economic growth in France and neighbouring countries, remains uncertain at this stage and could decline along the same lines as in 2012.”

Not all is gloomy, says the company, noting that “contracting has started the year with a very healthy order book in France, with the high-speed rail line project between Tours and Bordeaux, and abroad. However, if trends observed at the end of 2012 continue, there could be a downturn in order intake.”

To some extent hedging its bets, which seems like the safest thing to do in the post-financial crisis economy, the company summarizes, “Against this backdrop, the Group is expecting business to be flat in 2013.”