An expert insight into the scrap metal markets of both Russia and the Ukraine provided the focus of the BIR Ferrous Division and Shredder Committee joint Round-Table during the recently concluded BIR Fall Meeting.
According to Denis Ilatovsky, divisional vice president of Russia’s Mair Joint Stock Company, steel scrap collection in his country was expected to increase by some 20 percent this year to around 22 million metric tons while a continuation of favorable world steel market conditions would limit export growth opportunities in 2004. At the same time, he added, ‘there is a danger that export duty might be increased’ as a result of renewed pressure from domestic steel producers.
The imposition of an export duty of 30 Euros (about $34) led to a massive decline in Ukrainian steel scrap exports - from 1.858 million metric tons in the first half of last year to 596,000 metric tons during the same time this year, according to Ilatovsky.
The focus on these two Eastern European nations was sharpened by other presentations. Vadim Gurzhos, chairman of the Ukraine’s Metal Scrap Association, confirmed that his country’s ferrous scrap collections had been more than 1 million metric tons lower in the first eight months of 2003 at 4.807 million metric tons. While the Ukrainian parliament was unlikely to remove the export duty in the face of pressure from domestic steel producers, the speaker appealed to BIR to write a letter of support for the scrap industry’s attempts to cut the duty to 18 Euros.
Marina Mikhailova, director of the Far Eastern Recycling Association based in Vladivostok, Russia, suggested that her country’s own ferrous scrap export duty had resulted in an ‘over-saturation’ of the domestic market. The measure had provided ‘temporary’ support to domestic mills but, at the same time, had pushed a number of major scrap processors towards bankruptcy.
Robert Philip of Hugo Neu Schnitzer Global Trade, and BIR’s Ferrous Division president, noted that U.S. steel producers had been demonstrating a willingness to pay higher prices and to ‘buy scrap off the dock’. He believed domestic mills were prepared to exceed dock prices to assure themselves of an adequate scrap supply over the next six to 12 months.
“Scrap prices will need to stay at current or higher levels to continue to incentivise the collection and processing of raw scrap supplies - this seems to be happening,” Philip noted
The U.S. market report also anticipated significant increases in both domestic and international scrap prices over the next few months, although Philip also noted continuing concern about credit quality and collections.
The EU report compiled jointly by Anton Van Genuchten of TSR in Germany and Colin Iles of European Metal Recycling in the UK confirmed a 1.6 percent increase in EU scrap exports to Third Countries in the first seven months of this year; this included a 37.1 percent increase in Turkish purchases to 2.1 million metric tons, which had been prompted by the ‘dramatic’ decline in former CIS exports to the country. Overall, scrap demand was rising faster than available sources of supply, they concluded.
Limited availability of shredded scrap in Europe plus high shipping freight rates had forced Indian mills to increase their prices to around $ 200 per metric ton C&FFO by the middle of last month, reported Ikbal Nathani of the Nathani Group of Companies.
Meanwhile, China’s ferrous imports had jumped 5 percent in the first eight months of this year to 5.6 million metric tons, according to Jeremy Sutcliffe of Sims Group Ltd in Australia. Over the same period, the country’s iron ore imports had surged 30 percent - a trend consistent with China’s sharp increase in blast furnace steel melting capacity.
The Shredder Committee meeting revolved around an update from BIR’s Environmental & Technical Director Ross Bartley on the End-of-Life Vehicles (ELV) Directive. Many EU countries already had legislation in place for transposing the directive into national law. Additionally, Finland and Greece were expected to bring in legislation for early next year; no information was currently available from the Republic of Ireland or Luxembourg. Some of the EU accession countries - notably the Czech Republic and Slovakia - were known to be developing ELV-related legislation.