China Grows as Ferrous Force

Speakers at the Bureau of International Recycling (BIR) Fall Round-Table in Brussels noted the ever-increasing impact of China on the world’s ferrous scrap markets.

Ferrous markets have been relatively in balance for several months, but ramped up Chinese buying could change the equation, according to one speaker at the late October event.

John Neu of Hugo Neu Schnitzer Global Trade LLC, New York, referred to a “precariously perched” world scrap supply/demand balance that could be disturbed over the coming two months if China increases its overseas scrap purchases. Just before the late October BIR meeting in Brussels, Chinese buyers ordered upwards of 10 cargoes of scrap within a matter of days, according to Neu.

Meng Jianbin of the China Association of Metal Scrap Utilization told BIR attendees his country would need to melt 49 million metric tons of ferrous scrap by 2005, but would probably only generate 27 million metric tons within its own borders. Imports into China, which stood at just under 10 million metric tons in 2001, could reach an annual value exceeding $2.2 billion three years from now, he contended.

BIR speaker Alberto Canevali of the European Union’s Enterprise Directorate General hailed growth in China as “the real phenomenon,” and indicated that the country’s steel consumption could increase by as much as 30 million metric tons next year to 230 million metric tons. China would be responsible for 80 percent of the global steel production growth anticipated for 2003.

The global importance of the Chinese market was reflected in the request issued by Round-Table chair Björn Voigt for Jianbin to join the BIR Ferrous Division board.

While not booming like China, Japanese markets are at least improving modestly, said Sadao Taya of Shinsei Co Ltd. The market there has returned to a better balance following a period in which scrap prices had sunk to their lowest level since World War II, he noted. Many mini-mills were now operating far closer to break-even thanks in part to rapacious steel demand from China.

Regarding Eastern Europe, Vadim Gurzhos of the Ukrainian Metal Scrap Association claimed his government was seeking to put an immediate stop to exports of ferrous scrap. He appealed for the BIR to send an official letter to the Ukrainian president and government in a bid to ward off this “very serious” possibility.

The EU’s Alberto Canevali described moves within Russia and the Ukraine to block exports of ferrous scrap as “incompatible” with recent agreements reached between both nations and the EU. The EU would lobby Russia and Ukraine to cease the export bans, he added.

BIR Ferrous Division chair Voigt suggested Germany was “close to recession” yet was still enjoying healthy steel and scrap consumption this year. Around 45 million metric tons of scrap would be produced in 2002, just one ton short of the all-time high.