Steel production figures in most nations of the world remain healthy in the spring of 2012, with recyclers in Europe and North America more concerned about obtaining sufficient supply to fill orders.
Figures from the Brussels-based WorldSteel Association (www.worldsteel.org) indicate the world’s steelmakers produced 132.2 million tonnes of steel in March 2012, a figure that is 1.8% greater than that of March 2011.
The March 2012 global steel production figure also is up dramatically from the prior month’s figure of 119.2 million tonnes—an increase of 9.9% compared with the previous month’s output.
Among nations making the biggest leaps in production from February to March were China (55.9 million tonnes in February, 61.6 million tonnes in March); Turkey (2.76 million tonnes in February, 3.13 million tonnes in March); the United States (7.26 million tonnes in February, 7.76 million tonnes in March); and Russia (5.57 million tonnes in February, 6.4 million tonnes in March).
Nonetheless, the ferrous scrap market responded with slight declines in pricing in the April buying period. In the United States, ferrous scrap price averages declined slightly in April, though the scrap commodity continues to trade within a relatively narrow price range in 2012.
The prompt industrial composite grade (consisting of No. 1 busheling, No. 1 bundles and No. 1 factory bundles) tracked in the United States by the Raw Material Data Aggregation Service (RMDAS) of Management Science Associates (MSA), Pittsburgh, showed the most consistent decline, falling from $10 to $19 per ton on average in the U.S. from April 1 to April 20.
Shredded scrap sold for an average of $8 less per ton in the United States in April, according to MSA.
Winter conditions stifled the flow of scrap in Europe in February and early March, according to the March 2012 Schrottmarktinfo bulletin produced by Germany’s BVSE (Bundesverband Sekundärrohstoffe und Entsorgung). “The current shortage of certain obsolete scrap grades exists not only because of the increase in domestic demand, but can also be attributed to favorable export possibilities for both bulk and container freight in the past few months,” writes BVSE commentator Birgit Guschall-Jaik “As a result, according to trade circles, scrap stocks have been depleted.”
Concerns about the supply of scrap also arose as a topic at the Spotlight on Ferrous session at the ISRI (Institute of Scrap Recycling Industries Inc.) Annual Convention in Las Vegas in mid-April.
“The unusually mild winter will result in [improved] volumes in the first quarter for recyclers,” said Rich Brady, an executive vice president at OmniSource, a scrap company with more than 60 facilities in the United States.
The downside, added Brady, is the likely disappearance of any “spring thaw” on scrap flows that recyclers may expect based on past Aprils and Mays. “We’ve actually seen some flows decreasing a bit in April,” said Brady, “which is not normal.”
A scrap recycler with operations in the Western United States expressed similar concerns about supply, noting that industrial and retail generation seems to have hit a plateau in his region. Without a noticeable rebound in the construction sector, he does not see scrap volumes increasing in the spring.
According to the BVSE’s Schrottmarktinfo March report, Turkish steel mill buyers were able to take advantage of the mild United States winter by tapping into a perceived glut of scrap in the U.S. and make larger purchases without bidding up the price.
“The considerable delivery willingness on the part of U.S. traders can be put down to the glut of obsolete scrap available on the U.S. market during the months of January and February,” writes the BVSE’s Guschall-Jaik.
Ferrous scrap trader Ruggero Alocci of Italy’s Alocci Rappresentanze Industriali says European buyers entered the ferrous market in March and early April in part because Europe’s winter was not mild like the winter in North America. Mills in Italy, he said, had to “replenish scrap inventories after the February heavy snow and frost.”
Regarding the remainder of the year, one panelist at the ISRI Convention Ferrous Spotlight predicted a stable but not surging global steelmaking market.
Pat McCormick of the United States-based World Steel Exchange said he anticipated overall modest growth in world steel production in 2012. “We expect global steel growth of 1.6% in 2012—about one-third of the 2011 growth rate,” he commented.
McCormick also noted that global ferrous scrap demand hit a bit of a rut with the Arab Spring uprisings of early and mid-2011 (affecting Turkish mills), but that buyers from mills in China tend to step in and buy additional scrap when prices drift down because of global events such as these.
While the second half of 2012 is predicted to be lackluster, McCormick said the World Steel Exchange and its sister research company, World Steel Dynamics, are predicting a “bounce-back” occurring in the first half of 2013 that could result in 5% steel production growth for the year and rising steel and ferrous scrap prices.
Although Italy’s economy is far from vibrant, Alocci says “Q1 Italian steel production is growing at the same rate as 2011—around 4.6%—which is a positive fact.”
In the United States in the week ending April 14, 2012, 1.98 million tons of raw steel were produced, creating a capability utilization rate of 79.9%, according to the American Iron & Steel Institute (AISI). Production for the week ending April 14, 2012, was up 0.9% from the previous week (ending April 7, 2012), when the capability utilization was 79.2%.
Regarding those AISI production figures, panelists at the ISRI Ferrous Spotlight session commented that the figure is an average created by combining statistics from unlike steel industry sub-sectors. “The capacity rate is quite a bit higher for sheet mills than for [those producing] beams and long products,” said McCormick.
Panelist Spencer Johnson of International FC Stone, New York, said mills that make tube and pipe products for the energy sector also are operating at higher rates than structural steel mills.
Only a rebound in construction will bring the capacity rate back fully, said McCormick, adding, “It will probably take two more years for the overall capacity figure to hit the pre-financial crisis level.”