Germany (by Bjorn Voigt, TSR GmbH, Germany, Senior Vice President of the BIR Ferrous Division) German mills finally reacted to the flow of scrap into the export market by raising their prices.
Increased demand also prompted Germany's leading steelmaker, Thyssen-Krupp, to increase flat steel prices. The outlook for the German steel industry is more encouraging for the second half of this year although the country's general economy remains somewhat more sluggish. This is having a negative impact on scrap supply, with scrap availability expected to be tight through the rest of the year.
Little movement in scrap prices is anticipated for the second half of the year. Last year Germany's total scrap shipments decreased by 1.1 million metric tons to 19.2 million metric tons, reflecting the general drop in scrap arisings.
Japan (by Sadao Taya, Shinsei Co. Ltd, Japan, Board Member of the BIR Ferrous Division) The Japanese economy has remained depressed with bad debts at the banks rising.
There has been a decline in crude steel production, rebar output, scrap supply and scrap consumption, but strong export demand from China and Korea in particular has led a recovery in scrap prices.
Product prices have also recovered, although this improvement is attributable to production cutbacks rather than improved domestic demand. Many producers continue to operate at a loss and more restructuring, mergers and closures appear inevitable within the domestic steel industry.
The Japanese parliament is debating a proposal to introduce a deposit payment on new vehicle buyers to cover certain disposal costs, although implementation is still two years away.
Landfill space for automotive waste is rapidly disappearing and disposal fees are continuing to increase.
Pacific Rim and Australia (by Kumar Radhakrishnan, SimsMetal Australia) The region has witnessed improving economic fundamentals in most countries with the exception of Japan.
Meanwhile, US steel import tariffs have proved to be a blessing in disguise for the region given the increase in finished steel and raw material prices. There has been evidence of growing protectionism in the Pacific Rim. As an example, Malaysia has doubled import duties on cold rolled sheet to 50 percent, while Indonesia is planning to add 15 percent to the duties on hot rolled and cold rolled product.
Despite these measures, finished steel exports from Japan increased by 29 percent in the first quarter of 2002, while Japan's steel output has been estimated at a relatively strong 25 million metric tons in the second quarter. As a result, lower volumes of Japanese scrap have been available for export: overseas shipments totaled 1.26 million metric tons in the first quarter of 2002 compared to 6 million metric tons during 2001 as a whole.
Chinese imports during the first quarter remained largely unchanged at around 1.9 million metric tons although second quarter figures are thought likely to show an increase owing to the larger volume of business concluded over this latter period.
Ferrous scrap demand in Korea and Taiwan has increased this year due to rising steel production based on the strength of the construction industry and increasing billet prices. Korean imports in the first quarter were 1.8 million metric tons compared to 6.7 million metric tons for 2001 as a whole.
The Russian government's decision to ban exports of scrap from its Far East ports has been expected to boost demand for deep sea cargoes into the region. Estimates suggest Korea and Taiwan have generally imported up to 100,000 metric tons of scrap each month via these ports.
Several cargoes contracted from the ports have been cancelled owing to the suddeness of the Russian ban creating tightness in the market. South East Asian imports have been very strong this year owing to higher demand for finished steel.
Thailand has resumed its role as a consistent buyer while Indonesia and Malaysia have increased their imports to meet higher steel production levels. Russia (by Denis Ilatovsky, Mair, Russia) Russia's total scrap volume is likely to fall by 3-5 percent this year while exports are also expected to drop by 3-5 percent. Part of the reason for this is the constant rise in scrap production costs linked mainly to transportation; rail costs alone almost doubled last year and some regions have been virtually cut off as a consequence.
More transportation cost increases are anticipated during the summer. Russia's steel industry is in a weak position due to export market closures and to customs regulations shutting the country's Far Eastern ports to scrap exports. Domestic scrap prices are around $ 65-70 delivered.
Europe's scrap deficit has boosted prices and there are expectations of a positive impact on exports from the Black Sea region. Russia's exports fell 20 percent in the first quarter of the year but improved 10 percent in April.
Scandinavia (by Poul Norregaard, H J Hansen, Denmark) Sweden's steel industry has seen an improvement in orders this year. A healthier economic climate during the spring has led to increased scrap collections and this trend can be expected to continue during the second half of this year.
Shredder operators have also been encouraged by the increase in international metal prices, although optimism has been tempered by recent weakness in the US dollar.
Ferrous scrap collections in Scandinavia totaled 3.8 million metric tons in 2001 with Sweden accounting for 1.6 million metric tons, Finland 900,000 metric tons, Denmark 800,000 metric tons and Norway 500,000 metric tons. Also last year, crude steel output rose to 5.5 million metric tons in Sweden and reached 4 million metric tons in Finland.
United Kingdom (by Colin Iles, European Metal Recycling, UK, Vice President of the BIR Ferrous Division) UK steel output has been on a long-term downward trend but scrap arisings have remained reasonably constant over recent years, with the result that a greater proportion of raw materials has been heading into the export market.
Last year, nearly 55 percent of the 8.8 million metric tons of arisings went overseas, equivalent to an almost 40 percent increase in the average level of UK exports over the last decade.
Export demand has been good from South East Asia and China, while Turkey has resumed its buying of European scrap and Spain has continued to rely ever more heavily on imports. The UK has recently experienced some tightness in overall scrap supplies due to reduced arisings from manufacturing companies, although an increase in demolition scrap is anticipated in the short term due to the dismantling of several redundant factories.
UK steel production hit its lowest level for 54 years in 2001, with the exception of 1980 which was affected by a strike. UK output dropped from 18.5 million metric tons in the mid-1990s to 13.5 million metric tons in 2001. Production is expected to fall still further this year to around 12.3 million metric tons.
For the first time ever, imports accounted for more than half the steel consumed in the UK last year.
United States (by Robert Philip, Hugo Neu Schnitzer LLC, USA, President of the BIR Ferrous Division) The U.S. economy's capital spending and construction segments have remained quite sluggish, thereby restraining domestic steel prices. A continuation of current trends would suggest economic recovery beginning in earnest during mid-summer 2002 and peaking in Autumn 2003.
For the moment, the Bush administration's tariffs have led to a fall-off in steel imports while the domestic industry's utilization rates have improved from a low of 63 percent to around 89 percent.
The impact on scrap prices has been marked, with No 1 Heavy Melt Scrap rising from $64 per ton in November last year to nearer $93 during the second quarter. There have been signs of export scrap prices beginning to exceed those available on the domestic front. Higher scrap prices are expected to lead to an improvement in supply.
Continuing growth in the electric arc furnace share of the US steelmaking market constitutes yet more positive news for the domestic steel scrap industry.