BIR Congress: Steel Industry’s Health Remains Stable

Ferrous scrap remains in demand throughout the world.

May 31, 2011
Recycling Today Staff
Metals Commodities

Delegates attending the Ferrous Division Meeting at the 2011 Bureau of International Recycling (BIR) World Recycling Congress heard mostly positive things about the health of the steel and ferrous scrap industries.

Reporting from the European perspective at the late May event was Thomas Bird of Van Dalen U.K. Ltd/, Stratford-Upon-Avon, England. He remarked that the ferrous market in Europe has enjoyed “bullish sentiment” at times in the first half of 2011, but also has “stuttered somewhat” on occasion in reaction to world events.

Most recently, a “view of a weaker market in May did not materialize,” Bird commented. “Considerable volumes of tonnage were bought at the end of April and early May,” he continued. “Prices for HMS (heavy melting steel) increased to the high $460s and rebar levels for Turkish finished product were $710 at time of writing [this presentation].

“May saw healthy demand across the European Union, with [inventories] at mills running at relatively low levels,” said Bird. “The market has taken a little bit of a breather in the last few days, but I do not believe this is anything but just that. Finished product demand remains healthy, and we are expecting demand for scrap to remain strong for the immediate future.”

Ikbal Nathani of the Nathani Group of Companies, Mumbai, reported that India’s crude steel production has been growing from 60 million metric tons in 2009 to 67 million in 2010 to an estimated 75 million metric tons produced in 2011.

However, Indian mill companies are producing or buying greater amounts of direct-reduced iron (DRI) to feed their furnaces, opting not to bid up scrap prices in a competitive global market. “India is blessed with natural raw materials, and thus is not dependent on scrap,” said Nathani.

Also, India’s growing ship-breaking activity at facilities in Alang is “providing Indian consumers with superior quality HMS and re-rolling scrap,” said Nathani. “There are around 100 vessels currently beached and being broken” in Alang, according to Nathani, who said ship-breaking is providing some 2.8 million tons of ferrous scrap to the Indian market each year.

Andrey Moiseenko of Ukrmet Ltd., Doneck, Ukraine, told delegates that Russia collected some 21 million metric tons of ferrous scrap in 2010 while Ukraine collected more than 6 million metric tons.

Both government regulations and market conditions kept most of this scrap from being exported. New investments in electric arc furnace (EAF) steel mills in both nations has strained supplies. “Even one billet producer (in Ukraine) was stopped for a couple of weeks [because of supply constraints]; that has never happened before,” said Moiseenko. “Ukraine became a net scrap importer for one month, in February of 2011,” he added.

Blake Kelley of Sims Group Global Trade Corp., New York, noted that scrap prices in North America declined in early May but were rebounding as the month ended.

“There are significant transportation problems, both on the inland river system due to severe flooding and high water conditions, while the railroad system is struggling to perform as a result of a fully utilized railcar fleet,” Kelley remarked regarding supply constraints. “Difficulty with both transportation modes is frustrating dealer efforts to complete [delivery] commitments.”

On the demand side, Kelley noted that steel mills in the United States are running at about 73 percent of capacity, with flat-rolled steel in greater demand than long products. Scrap export flows are also healthy, Kelley reported. “China and Korea have been aggressively buying and consuming raw materials,” he told delegates. “China reportedly purchased many bulk cargoes with shredded pricing around $480 CIF; South Korea has also purchased many cargoes with heavy melting steel (HMS) prices flat in the mid-$470s CIF.”

That information was confirmed by Hisatoshi Kojo of Metz Corp., Tokyo, who reported, “In the end of April and early May, South Korea bought about 21 deep sea cargoes for May/June shipment, and China bought about 10 deep sea cargoes for June/July shipment.”

Kelley noted that the world’s steelmakers are on pace to produce 1.54 billion metric tons of steel in 2011, a figure that is some 111 million metric tons greater than the 2010 output. “An increase of this magnitude in steel production, and its corresponding increase in raw materials consumption, has made for an interesting beginning to the year,” said Kelley, adding that the world’s steelmakers at this pace will consume some 48 million metric tons of additional scrap compared to 2010. “Seemingly, there is enough supply to cover that amount of demand.

The 2011 BIR World Recycling Congress was May 23-25 at the Shangri-La Hotel in Singapore.