ISRI Roundtables: Bulls in the Pen

Several factors have contributed to a lackluster stainless steel scrap market in the past two years, but at least one panelist at the 2012 Institute of Scrap Recycling Industries Inc. (ISRI) Commodities Roundtable Forum nickel/stainless session was convinced better times are around the corner.

Panelist Andy Goenka of Steelbro International Co. Inc., Oyster Bay, N.Y., moved to the United States from India in 1980 to source stainless steel scrap. “Looking at the long-term, in 1980 I was very positive about stainless steel and even today I am,” he commented.

Goenka cited increased global stainless steel production capacity (32.1 million metric tons in 2011 compared to 19.2 million metric tons in 2001) as one reason, as well as the ongoing demand for finished stainless steel by makers of industrial machinery, building products, and demand from engineers specifying desalinization plants and other facilities that use pipe and tube.

Stainless steel scrap processors and shippers in the United States have not had as much to be positive about recently, as supply has been tight and export demand from China (now the world’s largest stainless steel producer) has been limited because of that nation’s use of nickel pig iron as a feedstock.

On the supply side, Alan Goodman of ELG Metals, Chicago, said a lot of the stainless scrap supply in the United States is being held back by people waiting for the price of to rise. “A lot of the old, privately held scrap dealers are holding [stainless steel] scrap until formulas get adjusted upward,” he remarked.

Goodman did not see a cause for celebration on the demand side either, especially regarding China providing an export market. “China is unable or unwilling to buy [stainless steel] scrap from the U.S. because they can make [finished stainless steel] cheaper with domestic scrap and nickel pig iron.”

Panelist Lisa Reisman of Aptium Global Inc., Chicago (manager of the www.metalminer.com website), noted that China’s use of nickel pig iron sourced from Indonesia could be running into a roadblock for protectionist reasons. “Resource nationalism” in Indonesia, said Reisman, is resulting in export bans and tariffs. “We are seeing [substantial] drops in nickel ore shipments to China,” said Reisman, noting that such shipments have fallen from 4.1 million tons in May 2012 to 2.2 million tons in June and just 1 million tons in July.

Stainless steel scrap remains the feedstock of choice at mills in North America and Europe, said panelists, with Goodman noting that while scrap provides about 30 percent of the feedstock to stainless mills in China, in the United States that number is in the 70 to 80 percent range each year.

Goenka pointed to India as a blooming export market for stainless scrap processors in the United States, as the nation is moving from a level of 1.85 million metric tons of stainless steel produced in 2006 to about 3.5 million metric tons in 2015.

But Goodman pointed out that new production capacity in Alabama (a stainless mill originally commissioned by ThyssenKrupp but now owned by Outokumpu) will likely soak up such scrap before it can make its way to India.

The new Alabama mill is among the reasons Goenka expressed an overall optimistic tone. “I’m absolutely bullish on stainless scrap in North America because of this,” he stated. “The demand in North America is going to be better than ever before.”

The ISRI Commodities Roundtable Forum was Sept. 11-12 at the Hyatt Regency Chicago.