Finished steel, even more so than ferrous scrap, is traded across borders, but political decisions are increasingly making the practice costlier, according to presenters at the 4^th Steel Scrap, Billet & DRI Trade Summit, hosted by SteelMint in Bangkok in late August.

In the global trade-intensive economy of the 21^st century, steel producers in nations including Russia, Turkey and China have exported finished steel and semi-finished steel in considerable amounts to support manufacturers and construction projects around the world.

Not all of those importing nations are remaining welcoming however, with Artem Polischuk of Russia-based steel producer Magnitogorsk Iron & Steel Works (MMK) pointing to an “escalation of anti-dumping actions” from the United States, the European Union, India, Indonesia and several other Asian countries.

Although Polischuk says MMK is “used to exporting steel in such an environment,” he said that in late 2019, “Only Southeast Asia and Latin America look like a free market” for exporters.

Polischuk said that nonetheless, some 25 to 30 percent of finished and semi-finished steel is traded globally, and that low-cost producers such as MMK (which has mills in Russia and Turkey) can supply steel cost-effectively to willing buyers wherever they may be.

Turkish steel mills have been faced with domestic economic woes, including a depreciating currency, according to Ahmet Kunt of Turkish electric arc furnace (EAF) steelmaker Colakoglu Metalurji A.S. This has curtailed the amount of steel produced and consumed in Turkey, and also entailed the purchase of less imported ferrous scrap in 2019.

Turkish mills enjoyed a healthy export market in 2018, said Kunt, but 2019 has witnessed a severe decline in shipments to the United States, which had been one of the five major buyers in 2018. The better news for Turkish mills has involved increased finished and semi-finished purchases from Italy, Israel and several nations in the Middle East-North Africa (MENA) region.

Kunt said the 2019 shipment trends could be long-lasting, since the U.S. government has shown no signs of lowering its tariffs on Turkish steel, and in the meantime some “12 million new tons of EAF [steelmaking] capacity” has been announced in the U.S.

China is by far the world’s largest producer of steel, and while it consumes enormous amounts of its own product, it also exports a steady volume of finished steel and semi-finished steel billets, according to Wang Mei of Shanghai-based Mysteel. She said before 2015, such exports were “discouraged” by outbound tariffs, but those tariffs on steel have been reduced and now eliminated during the past five years.

The lifting of export fees does not mean China is necessarily poised to flood the global market with exported steel, said Wang. She said anti-pollution efforts have eliminated some 120 million tons per year of induction furnace steelmaking capacity in China during those same five years.

Nonetheless, China’s largely state-owned basic oxygen furnace (BOF) steelmakers continue to churn out billets, many of which make their way to the global market, and in particular to Southeast Asian countries that have “infrastructure and urban construction demand,” said Wang.

Wang added that additional rolling capacity to produce flat steel will likely keep many Chinese billets at home, but as in all things economic, market factors will play a role. She said when prices for billets within China drop, exports can become attractive, and there will likely be “a small amount of billet exports increasing when prices decrease” throughout the next decade.

The SteelMint 4^th Steel Scrap, Billet & DRI Trade Summit was August 27-29, 2019, at the Hotel Avani Riverside in Bangkok.

Several presenters at the 4^th Steel Scrap, Billet & DRI Trade Summit, hosted by SteelMint in Bangkok in late August, provided insight into the growing steel industry and ferrous scrap trade in the ASEAN (Association of Southeast Asian Nations) region. ASEAN consists of Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

Pichsini Tepa-Apirak of the Malaysia-based South East Asia Iron & Steel Institute (SEAISI) said Vietnam has been the rising steel consumption and production star in the region. The nation was the sixth-largest per capita consumer of steel in the ASEAN region in the 1990s, but now ranks first.

As of 2018, Vietnam produces 45 percent of steel made in the ASEAN region, far ahead of Thailand (19 percent) and Indonesia (18 percent). The remainder of crude steel or foundry iron produced comes from Malaysia (12 percent), the Philippines (4 percent) and Singapore (2 percent).

Electric arc furnaces (EAFs) provide much of the region’s capacity, with Tepa-Apirak referring to such production as “mostly scrap-based.” SEAISI estimated the region’s domestic ferrous scrap supply at 20.3 million metric tons in 2018, prompting ASEAN steelmakers to import some 10.4 million metric tons of scrap that year.

Vietnam and Indonesia are the largest scrap importers, with the United States and Japan acting as the largest scrap suppliers to the region, said Tepa-Apirak.

While additional steelmaking capacity is being added in the region, particularly in Vietnam and Indonesia, Tepa-Apirak said several other ASEAN nations (including Thailand and the Philippines) seem content to import sizable amounts of finished steel and semi-finished billets.

Rajiv Mangal, president and CEO of Tata Steel Thailand, said that nation has banned the installation of any new steel rebar production capacity for the next five years, in part because the nation’s current mills are struggling with a low capacity utilization rate.

The demand for steel in construction applications in Thailand has dropped by 9 percent in the first half of 2019, said Mangal, but momentum could shift if several planned infrastructure projects get underway in 2020. “I feel past 2020, we should see a boost in steel demand from Thailand,” he stated.

R.S. (Raj) Vaidhyanathan of the United Arab Emirates-based scrap trading firm Indicaa Group Ltd. said the growing flow of ferrous scrap into the ASEAN region and the Indian subcontinent is prompting the question of when and how a new benchmark ferrous scrap export price may need to be established. Currently, prices to largest global scrap importer Turkey most often serve as the benchmark price.

Vaidhyanathan said Asian nations combined are now involved in 33.1 million metric tons of ferrous scrap trading, surpassing Turkey’s 20.7 million metric tons of activity. However, that 33 million metric tons of trading is divided among several nations, including Vietnam in the ASEAN region as well as India and Pakistan on the Indian subcontinent and South Korea and Japan in East Asia.

That division makes finding an individual nation to replace Turkey as a “benchmark setter” difficult, said Vaidhyanathan. He pointed to Bangladesh and to Vietnam—which accepts both break-bulk and containerized scrap cargoes—as nations to watch.

The SteelMint 4^th Steel Scrap, Billet & DRI Trade Summit was August 27-29, 2019, at the Hotel Avani Riverside in Bangkok.

Market conditions are slow for recovered paper in Europe. Jean-Luc Petithuguenin, founder and CEO Paris-based Paprec and paper division chairman of the Bureau of International Recycling (BIR), Brussels, says packaging demand was strong last year, but he says that has calmed down. He says prices for recovered paper decreased steadily this year.

Petithuguenin adds that it’s valid to talk about a “crisis” in the recovered paper market, as prices have reached such low levels that it’s tough to sell some recovered paper grades anywhere. 

“The papermakers select and take what they want,” he says.

Petithuguenin leads one of the largest recyclers in Europe—Paprec currently has about 9,000 employees across 200 sites in France and Switzerland. He has also been the paper division chairman at BIR for about two years. Recycling Today connected with Petithuguenin to get his perspective on the recovered fiber market in Europe and learn what the recycling industry can do in response to new low prices.

Recycling Today (RT): Looking at the past year, what has the demand been like for recovered paper in general? Is there demand for these products—why or why not?

Jean-Luc Petithuguenin (JP): In the European market, after a euphoric year of 2018, the packaging demand has calmed down. Reel price is tight as paper mills sometimes have trouble getting rid of their finished products. As they are facing a plentiful offer of waste papers and significant stocks, they are gradually decreasing prices. The abundant competition coming from USA or U.K. also disrupts the market. The delivered-to-factory prices in Europe are low and some papermakers do not hesitate to use it as a source of supply. The major problem to be managed this summer is the lack of space granted for our tons by papermakers.

As for the Southeast Asian market, it is overflowed with proposals from the USA, U.K. and other countries who are dumping their prices so much that even producing the highest quality is not enough anymore.

RT: Have recyclers had much luck this year with exporting recovered paper? If so, where is there export demand and why?

JP: Usually, at this time of the year, prices and demand are rising along together. This is just the opposite this year. There is not enough exportation. The demand is low, and some paper mills shut down their machines from time to time in order to control their stocks and lower the pressure. Prices are therefore dropping, and it is getting difficult to find buyers for some grades such as magazines. 

Exportation to Asia is complicated. It’s not so easy to get orders. There are three markets: Indonesia, China and southeast of Asia. Demand to China is close to zero. We can export to Indonesia, but the new legislation is very difficult to be applicated. Demand to Vietnam [and] Thailand is normal. The situation for some grades, such as white heavily printed multiply board and newspapers, is getting more and more complex. Some grades are hard to sell, and prices are unstable.

Regarding high grades, prices have kept dropping for several months after reaching peaks in 2018. Pulp prices are lowering as well as its substitutes.

Jean-Luc Petithuguenin

RT: You describe that it’s “valid to talk about a crisis” in the recycled paper industry. Why is that? How is the market for recovered paper different today than it has been before?

JP: Yes, we can talk about a real crisis. Prices have reached such low levels that it has become almost impossible to sell some kinds of grades or origins anywhere. Have we hit rock bottom? It is difficult to guess and anticipate what will happen in the second semester, but there are few positive signs for the moment. New machines are due to arrive on the market within a year and beyond.

RT: When would you say that a crisis for recovered paper started?

JP: July 2017—that’s the very precise beginning of the current crisis. China says it will drastically reduce its quotas for 24 materials, among which paper and plastics. We thought at first that this would only be true for a short time—as the demand for packaging starts there and is only growing, we expected China would reopen its borders. But it didn’t. 

RT: Have conditions improved at all since July 2017?

JP: Before July 2017, China imported every year around 30 million tons of raw material from recycling industry. In 2018, it was 18 million [tons]. This year we expect 11 to 12 [million tons] as it is due to be reduced by another 50 percent next year. We can expect the border will be totally closed 2021. 

New machines will arrive in Asia to produce reels for China. We expect the situation will be better after next year.

RT: What paper grades have been the toughest to move? What grades of paper have been the easiest to move?

Walmart, Bentonville, Arkansas, and TerraCycle, Trenton, New Jersey, have partnered to launch a large car seat recycling event at about 4,000 Walmart stores across the U.S.

According to a news release from Walmart, the first-ever Walmart Car Seat Recycling Event will take place Sept. 16-30 in celebration of National Baby Safety Month. Customers will be able to trade in used car seats at the participating stores’ service desks and receive a $30 Walmart gift card that can be used in store or online to buy items for their baby. 

All car seats collected in the program will be recycled through TerraCycle in order to divert them from landfills, Walmart reports in a news release. 

“Safety—especially car seat safety—is a top priority for Walmart’s Baby department, so we wanted to use our size and scale to create an event that offered unprecedented access to trade in an outgrown car seat for a gift card,” says Melody Richards, vice president of Walmart Baby. “Sustainability is of equal importance to Walmart, so we’re happy to work with TerraCycle who will recycle every component of the car seats.”

“Through the Walmart Car Seat Recycling program, traditionally nonrecyclable car seats are now nationally recyclable,” adds Tom Szaky, CEO and founder of TerraCycle. “We are proud to work with this forward-thinking company to offer families from coast-to-coast a way to give their car seat, the item that has kept their little ones safe, a second-life. Through this event, we expect to divert the plastic equivalent of approximately 35 million water bottles from landfills.”

More information about this event and others at Walmart can be found online.