BIR Speakers See Difficult Near Term Ferrous Markets

During a roundtable panel discussion on ferrous markets, held during BIR’s fall meeting, scrap processors from throughout the world forecast a tough market going forward.

The biggest drag on the international market continues to be the difficult environment for the U.S. steel industry. According to John Neu, Hugo Neu, steel mills in the United States have been seeing downward pressure before the terrorist attacks Sept. 11.

U.S. raw steel production was expected to fall to around 65 percent of capacity in the near future with most producers planning to shut for at least one week during both November and December. Foreign steel imports had fallen significantly but many products were still being sold in the United States at prices that are forcing even highly competitive mills to cut production, according to Neu.

The Japanese market also is seeing similar difficulties, according to a representative from the Japanese ferrous market.

Sadao Taya, from Japan, called the Japanese steel industry “a bottomless quagmire.” Steel production cutbacks were insufficient and had arrived ‘too late’, he claimed. Scrap prices and demand had fallen, while exports were likely to rise to more than 5 million metric tons by the end of the year - a complete inversion of the situation two decades ago when Japan was a heavy importer of scrap, Taya pointed out.

According to the Australia & Pacific Rim report, China had been the region’s only country to record steel production growth during the year, although its scrap imports had slowed during the second half of the year. The Chinese government had reduced the number of import licenses available for finished steel products following a 10 percent increase in imports of finished and semi-finished products and a 25 percent drop in exports.

According to the report on Europe’s ferrous scrap industry, many ferrous scrap industry customers - including electric arc furnaces - were losing money.

Amid the gloom, Igor Kouzmin of Russia’s Mair Joint Stock Co., provided some modest upbeat news. Scrap exports Russia and the Ukraine were starting to decline, and were unlikely to increase over the next several months.

Russian scrap exports are expected to reach no more than 7 million metric tons, compared to 7.9 million metric tons last year. Further, Ukranian exports were expected to decline by 15 percent this year.