BIR: Global scrap market recovers unevenly but confidently
The ferrous scrap industry continues to gradually recover from the COVID‑19 impact. Some regions have already almost completely return to the pre-pandemic levels, while others will need more time to fully restore the business, Metal Expert learnt during the BIR World Recycling Convention, held on October 12‑16, 2020.
Participants placed great emphasis on the Chinese market during the meeting, which continues to gradually increase steel production and consumption. Though H1 2020 scrap usage fell by 7.3% year-on-year (to 93.8 million t) in China, the drop was mainly caused by the virus spread at the start of the year, Metal Expert learnt.
In Q2 separately, for instance, Chinese steel scrap consumption was 52.2 million t, zooming up by 25.7% in a sequential comparison, according to Rolf Willeke, Statistics Advisor of the BIR Ferrous Division. Hence, the figures accentuate the country’s role as the world’s largest ferrous scrap user.
On top of that, China has huge potential for the long term. By 2030, social scrap reserves are expected to reach 13‑13.5 billion t, with steel scrap generation reaching 300‑320 million t each year, according to China Association of Metalscrap Utilization (CAMU). Also, a proportion of ferrous scrap in steelmaking operations will be increasing in the country or exceed the global average, CAMU predicts, despite the expected drop in crude steel output to 700 million t by that time versus above 1 billion t in 2020.
Talking about the near future, the probability of import ban relaxation was discussed. “We are not anticipating steel scrap being allowed into China from early next year. We think that ultimately there will be a change – some kind of reclassification – but that is more likely to happen at the end of next year,” a panellist said during the BIR meeting.
Expectations regarding a recovery of demand for imported scrap in India are quite pessimistic so far. “Domestic steel and ferrous scrap demand will be subdued for the rest of the year, until things begin to normalise, probably in Q1 or Q2 of 2021,” Zain Nathani, managing director of Nathani Group, mentioned. Among the positive factors for the rebound, the speaker noted quite successful sales of finished products to Asian markets and Africa, as well as the growth of automotive sales. At the same time, Pakistan and Bangladesh were able to cope more effectively with the consequences of the pandemic. Both markets have been receiving regular bulk and
containerised shipments from major exporters such as the US, the UK, and Japan.
Steel demand in Pakistan is mostly supported by the Chinese-Pakistan corridor initiative, while demand in Bangladesh – by government measures. South Africa introduced several measures to protect local scrap supply. It implemented a modified preferential pricing system for scrap, which will remain in place until an export tax is introduced in 2021, according to Quintin Starkey, a representative of South Africa’s Metal Recyclers Association (MRA). The MRA was asking the government to adopt an ad valorem duty of 10% on ferrous scrap with a duty- free rebate system for metals not consumed locally and/or when supply exceeded demand, Metal Expert learnt.
The expectations for Europe and Turkey are optimistic, as both scrap markets have hold ground in 2020, Metal Expert understands. Denis Reuter, a board member of Germany-based TSR Recycling, noted that the mentioned markets had been “surprisingly strong” during the last few months. Turkey boosted scrap imports by 7.8% to 9 million t in the first six months of 2020, while European deliveries to Turkey increased by 2.6% to 6 million t, according to Rolf Willeke.
Scrap intakes in the US also returned to the pre-pandemic levels, but mills’ capacity utilisation rates are still trailing behind the last year’s data. Specifically, the indicator averaged 65.9% from the year start till mid-October 2020, while the ones observed in full 2019 was reported at 80.7%, according to the American Iron and Steel Institute. In general, Greg Schnitzer, BIR Ferrous Division President, stressed that the steel scrap industry has withstood quite successfully in such a difficult time and expressed his hopes for a strong finish of the current year.