BIR CONVENTION: Priced Out of the Market

Sustained high pricing for stainless steel scrap is motivating consumers of the material to develop alternative supply options, according to industry analyst Markus Moll of Steel & Metals Market Research, Austria.

Speaking at the Stainless Steel & Special Alloys Committee meeting at the Spring 2006 Bureau of International Recycling (BIR) Convention, Moll noted that stainless steel producers such as China’s Boa Steel have developed stainless steel scrap substitute materials to use in place of high-priced and hard-to-find stainless scrap.

Moll’s overview of the stainless steel industry, to which he serves as a consultant, included the comment that “scrap is the single most important cost item [in] my customers’ bookkeeping.”

He also noted that stainless steel production is spread throughout the globe, with the result that just 16 percent of stainless steel scrap flows internationally, while 84 percent stays in its region of origin. On a net basis, however, Moll is projecting that there might be a 300,000-metric ton supply deficit of stainless scrap this year.

Sustained high LME nickel prices and high stainless scrap prices are changing the stainless industry, with producers switching to lower-nickel content alloys and also looking to devise alternative feedstock systems that will make them less dependent on scrap.

“The scrap industry has to reassure producers that scrap remains the value source for nickel,” Moll told attendees.

Also at the session, Stainless Steel & Special Alloys Committee chairman Sandro Guiliani of Italy’s Giuliani Metalli-Cronimet Group welcomed attendees and noted that an expected record attendance of up to 1,100 delegates in Beijing “shows the great interest in this country.”

A North American market update provided by Barry Hunter of Hunter BenMet Associates, New York, indicated that “U.S. [stainless] mills are operating close to 100 percent” with “order books strong and building.”

In Europe, Guiliani reported that stainless scrap has gone “from surplus to shortage,” with Russian delegate Ildar Neverov of TelpotovResource reporting that a value added tax situation in that nation is hampering scrap flows out of Russia.

A report on specialty alloys prepared by Stuart Frelich of Universal Metal Corp., Worcester, Mass., was read by Barry Hunter. Frelich reported that Boeing, Airbus and other aircraft makers have a backlog of some 2,000 aircraft to be made, keeping titanium demand strong.

Military spending is also strong throughout the globe, with China among the nations adding to or updating its military aircraft fleet.

Overall, specialty metals dealers see “strong demand for the foreseeable future,” Frelich indicated.

The BIR Spring 2006 Convention was held at the China World Hotel in Beijing May 29-31.