BIR World Mirror on Ferrous Metals – Quarterly Report February 2022 : Early-year pressure on scrap prices despite reduced flows into yards
The opening weeks of 2022 have brought evidence of a shift in the market, according to the latest BIR Ferrous Mirror publication (Members only) - the first to be produced under the leadership of new President Denis Reuter of Germany-based TSR Recycling GmbH & Co. KG.
In the USA, the combination of a scrap overhang in the marketplace, weaker export sales in December and a lack of new steel orders provided domestic mills with the necessary ammunition to negotiate a ferrous scrap price cut of US$ 50-60 per gross ton in January. This was despite a drop in yard intakes of up to 30% in some areas as a consequence of, among other factors, a lack of labour owing to Omicron infections and tough weather conditions.
Demand remained weak in early February and most US sheet mills appear to have adequate scrap for their current needs. But if mill orders return as expected, the lower scrap intakes could lead to a turnround in the pricing equation.
Across in Europe, labour shortages are also impacting material flows into yards, it is reported from the UK. Mills have been under pressure from suppliers to raise their prices, leading to a stalemate between sellers and consumers. Recent days have seen the emergence of negotiated deals at improved levels in Turkey and notably in Egypt on higher billet pricing. However, container freight rates are continuing to impact the bottom line.
For basic grades, prices for standard flat products on the German steel market fell by as much as Euro 250 per tonne from their summer 2021 highs but are still some Euro 250-350 above the levels of January last year. On the domestic scrap market, new steel scrap prices climbed almost 80% over the period, sustained by increased export prices.
Supply chain problems and production stoppages have negatively affected volumes of new scrap and thus the price gap to old scrap has widened.
In 2021, Japan’s H2 scrap price achieved a record-high average. At the same time, statistics from the Ministry of Finance and Trade show that the country’s ferrous scrap exports were down more than 30% year on year in November - the sixth consecutive month in which the total was lower than in 2020.
Meanwhile, the figures contained in the latest “World Steel Recycling in Figures” update from the BIR Ferrous Division’s Statistics Advisor Rolf Willeke reveal that China’s steel scrap consumption was 18% higher year on year at 183.17 million tonnes in January-September 2021, thus underlining the country’s goal of higher steel scrap usage in order to reduce CO2 emissions from crude steel production.
China tops the world list of steel scrap consumers. Other leading users to register year-on-year increases in the opening three quarters of 2021 included: the EU-27 (+21.1%), the USA (+17.4%), Japan (+21.8%), Turkey (+19.1%), the Republic of Korea (+11.5%) and Russia (+9.9%).
In the same period, Turkey remained the world’s foremost scrap importer by upping its overseas purchases by 16.6% to 18.818 million tonnes, while the EU-27 headed the steel scrap exporter league table with a 20.8% year-on-year increase to 14.604 million tonnes.