
Markus Moll, managing director of SMR GmbH – Steel and Metals Market Research, Austria, told attendees of the Bureau of International Recycling (BIR) Stainless Steel & Specialty Alloys Committee webinar Oct. 16 that the effects of the COVID-19 pandemic on the stainless steel sector have been more muted than those on global gross domestic product (GDP). The webinar was part of the 2020 BIR World Recycling Convention Week series of webinars from Oct. 12 to 16.
Moll predicted that global stainless steel consumption would decline by 4 percent in 2020 compared with a 4.4 percent reduction in global GDP, while 2021 would see an 11 percent gain in stainless consumption. Moll said China’s V shaped recovery from the economic disruption wrought by the pandemic and its forecasted 3 percent growth in stainless demand will help to prop up the stainless sector. Stainless consumption would not fare as well in other parts of the world, he said. Moll predicted that stainless consumption in Europe and U.S. would decline by 13 percent this year and be followed by gains of 16 percent and 19 percent, respectively, in 2021. Asia (excluding China) likely will see a 12 percent decrease in stainless consumption in 2020 before rebounding by 22 percent in 2021.
The decline in stainless steel production seen in 2020 bucks six-year growth trend, according to the International Stainless Steel Forum (ISSF), Belgium, which also hosted a conference in mid-October. In 2020, ISSF says it has observed a significant fall in melting shop output in excess of 9 percent in the first six months of the year compared with the equivalent period in 2019. The impact of the pandemic was most significant on stainless steel production in percentage terms in Europe, the U.S. and Asia (excluding China).
The ISSF’s forecast for stainless steel consumption is less optimistic than Moll’s. The nonprofit predicts a 5.1 percent decline in consumption in 2020 and an 8.4 percent increase for 2021.
Moll also offered a positive outlook for the stainless scrap sector during the BIR webinar, saying 300 series stainless steel would increase its share of the global stainless steel market from 54.1 percent in 2019 to 59.3 percent by 2030. “That means nickel will win and scrap will win,” he said.
SMR calculates that 9.8 million metric tons of stainless steel scrap were traded globally in 2019. At roughly 255,000 metric tons, much of the stainless scrap exported from the C.I.S. went to Europe, though that region was a net exporter of stainless, sending approximately 590,000 metric tons to India in 2019. That figure represents 7 percent more scrap than Europe shipped to India in 2018. North America also was a net exporter of stainless steel scrap in 2019, shipping 300,000 metric tons to Asia (9 percent less than in 2018) and 350,000 metric tons to Europe in 2019 (3 percent less than it shipped in 2018).
America and Europe are among the world leaders in terms of the percentage of scrap used in stainless steel production. The U.S. scrap ratio is more than 80 percent, while Europe’s is slightly less than 75 percent, Moll said. He also described India as “a massive scrap market,” noting that country’s average scrap ratio was nearly 80 percent in 2019.
However, China’s scrap ratio was only slightly more than 20 percent in 2019. Moll explained that the country’s ability to use scrap in its stainless steel production grew faster than its internal scrap supply, causing scrap’s share of production to decline from 25 percent in 2017 to the current figure. He said China generates roughly 3 million metric tons of scrap annually, which remains in the domestic market.
China produces approximately 60 percent of 300 series stainless steels, Moll said, though its share of the total stainless steel market is even larger. China and Indonesia combined account for 68 percent of stainless steel production. However, anti-dumping measures in other parts of the likely will curtail further growth, he said, though that could be supplanted by increased exports of finished products that are made with stainless steel.
Additionally, attempts to reduce carbon dioxide emissions favor the use of scrap as noted by BIR Stainless Steel & Special Alloys Committee Chairman Joost van Kleef of Oryx Stainless BV, Netherlands, earlier in the webinar. In contrast with China, he said Europe’s stainless steel output is based in stainless steel scrap. Van Kleef said the time will come when the "extremely positive" CO2 footprint of this “underestimated material” will be reflected in the price of scrap.
While stainless steel had an “upbeat” start to the year, coming off record production in 2019 and a promising outlook for 2020, he said output in the second quarter was the lowest it has been in three years because of the pandemic. However, certain stainless steel-consuming sectors have since seen a “slow and steady increase,” van Kleef said.
In his market report at the start of the webinar, Vegas Yang of HSKU Raw Material Ltd., Taiwan, said hot-rolled stainless steel imports from Indonesia to Taiwan account for 36 percent of the market. Despite this, scrap demand has remained stable, with melt capacity rates ranging from 60 to 80 percent.
He described stainless steel scrap demand in China as strong, adding that the country’s V-shaped recovery is increasing stainless steel demand and raw material prices.
Yang also said India’s demand for stainless scrap was “rather strong,” with even 200-series scrap experiencing increased demand. However, actions on the part of one stainless scrap consumer in that country could see that number decline in the coming year.
Mahiar R. Patel of Cronimet Singapore Pte. Ltd., presenting on behalf of Andre Reinders of Nimomet LLC, said India’s Jindal Stainless reportedly is committed to reducing its reliance on imported raw materials, which stood at 65 percent in 2017 compared with 45 percent today. The company is looking to reduce scrap imports further in 2021 to 35 percent. Sourcing this material domestically has a number of benefits, Patel said, including reduced financing costs and lower exposure to market exchange risks.
Doug Kramer of Spectrum Alloys in Los Angeles said the U.S. stainless market appeared to be improving from very low levels as of mid-October, though mills’ capability utilization was still below “healthy” levels.
He added that the export market for stainless steel scrap has been “extremely poor,” with demand down 28 percent. He mentioned weaker demand from Taiwan, India and Canada, in particular, citing U.S. trade data. Credit insurance availability also is tightening for export sales, Kramer said.
The presidential election and worsening COVID-19 outbreaks are creating uncertainty in the U.S., he said. However, Kramer added, “Scrap remains resilient and hopefully the worst of the downturn is behind us.”
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