Strength In Scrap Volume Sales But Prices Down Since April

During the BIR’s spring meeting speakers at the Ferrous Division meeting noted that while scrap volume sales are strengthening, although prices have dipped since April.

After slowing its purchases over recent months, China was likely to re-emerge as a strong buyer of scrap “but perhaps in a more graduated manner than the on/off light switch that seemed to have been flipped previously”, said Robert Philip of Hugo Neu Schnitzer Global Trade and president of BIR’s Ferrous Division..

Philip predicted ‘continued strength in scrap volume sales and scrap prices’ and took further encouragement from the presentation by Dieter Ameling, president of the German steel federation Wirtschaftsvereinigung Stahl, who highlighted strong growth in world steel production and limited availability of scrap.

According to Ameling, global crude steel production was expected to surge past the 1 billion metric ton mark this year, primarily due to the massive growth in the Asian market, and particularly in China.

Based on statistics from the International Iron and Steel Institute, he indicated that China’s finished steel utilization could reach 263 million metric tons this year compared to 153 million metric tons just three years ago. Furthermore, it was estimated that China would be using 320 million metric tons by 2007 and would achieve annual per capita consumption of just under 300 kg by 2010.

By comparison, India was currently recording of consumption rate of 35 kg per head of population and therefore offered major scope for future growth.

Ameling added that scrap prices had recently achieved ‘record highs’ and that the ‘recycling share’ of world crude steel production had fallen from 48 percent in 1991 to around 42 percent last year.

Market reports generally echoed the upbeat tone adopted by Philip. The U.S. report, read by Denis Mittleman of Hugo Neu Schnitzer, predicted a relaxation of China’s tight monetary controls over the next few months to enable mills to replenish depleted raw material stocks. Present CIF prices of less than $200 per metric ton in Turkey and less than $ 220 in Asia were unsustainably low. However, the speaker also warned that steel demand in the United States would ultimately ‘drop off in large part’ due to record oil prices.

Reporting on EU trade, Anton van Genuchten of TSR GmbH & Co. KG in Germany confirmed that scrap consumption in the region had totaled around 85 million metric tons last year, and had therefore remained practically unchanged over the last four years. Given the ample supply of scrap in Europe, he expressed surprise at the modest extent of the downward price correction seen in the weeks leading up to the convention.

Divisional Vice-President Denis Ilatovsky of Mair Joint Stock Company in Russia suggested that, in only a few years from now, his country could have reduced steel scrap exports to such an extent that it would become a net importer. “Over the next three to five years, demand for steel scrap on the domestic market could increase by 5 to 7 million metric tons per year,” he contended.

In a report on the activities of the European Ferrous Recovery and Recycling Federation, Christian Rubach, president of the association, spoke of the introduction of EU duties on U.S. ferrous scrap imports: these would increase in monthly increments of 1 percent to reach 17 percent by this coming March.