BDSV sees troubled 2020 ferrous scrap path

The Düsseldorf, Germany-based Bundesvereinigung Deutscher Stahlrecycling und Entsorgungsunternehmen e.V. (BDSV) says the market for ferrous scrap as of late April “has been hit hard by the corona crisis, both on the supply side and on the demand side.” The trade association’s late April document states it is “difficult to make a forecast” as Europe restarts from COVID-19-related shutdowns.

The BDSV also prepared a summary of how the German ferrous scrap market fared in 2019, writing, “The industry is in a recession and its production has been declining for over a year.” On a positive note, BDSV does say, “The share of scrap used in crude steel production [in Germany] has increased from 43.8 percent in 2018 to 44.6 percent in the past year.”

Overall, BDSV characterizes 2019 by writing, “The European and especially the German steel industry can look back on a difficult financial year 2019. Worldwide overcapacities in steel production and protectionist U.S. policies directed large amounts of steel into the European market."

The group continues, “Crude steel production in the EU-28 decreased last year by 4.9 percent to 159.4 million metric tons compared to 2018. In Germany, crude steel production fell by 6.5 percent year on year to 39.7 million metric tons, the lowest [volume] since 2009.”

The steel sector’s woes thus had an impact on scrap demand and pricing, adds BDSV. “Steel mills reduced their scrap purchases by 6.2 percent compared to the previous year to around 13.7 million metric tons. Foundry scrap purchases fell by 9.2 percent to 3.2 million metric tons in the same period.”

In total for 2019, a 3.2 percent decline in exports was less pronounced than the 6.2 percent decrease in domestic demand. “This underlines the importance of free international market access for recycling products,” states the BDSV.

The association writes, “The hope of an economic recovery in spring 2020 was dashed by the consequences of the corona pandemic. Due to weeks of plant closings in the automotive industry and short-time work in many branches of industry, the volume of scrap has decreased significantly. Overall, the collection of scrap has declined significantly as a result of the measures to contain the coronavirus. Steelworks and foundries have also cut production and adjusted to the reduced demand.”

Looking ahead, BDSV writes, “It is currently difficult to make a forecast. How quickly the economy will recover not only in Germany but worldwide depends very much on how long the measures to contain the coronavirus will take. From the BDSV’s point of view, it is important that companies are able to cope with the losses they have now suffered. In addition to government financial aid programs, the implementation of the circular economy action plan and stimulating demand for recycling products are top priorities.”