BIR World Mirror on Ferrous Metals: Material shortages continue to intensify amid low prices
A concise summary of the BIR World Mirror on Ferrous Metals – Issue July 2023. Full version with detailed market reports available in the Members Only section of the BIR website.
After a satisfactory first quarter for recycled steel trading, the climate deteriorated significantly in the ensuing three months and international quotations tumbled almost 20% between mid-March and early July, according to the latest World Mirror publication compiled by the BIR global recycling organization’s Ferrous Division. However, a post-summer rally is widely anticipated as growing material shortages are set to come up against the traditional seasonal upturn in demand.
During recent months, weak industrial data and a depressed real estate market dampened economic optimism in China while measures taken by the central government failed to revive consumption. Nevertheless, the Chinese steel industry upped its production and thereby intensified the pressure on international prices in a generally lacklustre market. Order books for Europe’s steel mills, for example, have generally become much thinner.
As for recycled steel, leading importer Turkey is facing massive challenges, including slow demand for its finished steel products. This is reflected in offers for furnace-ready material by Turkey’s steel producers. From the UK, it is reported that bulk deep-sea shipment levels for HMS 80/20 have recently slipped to a low for 2023 which is 22% below the peak recorded at the end of February. For available container destinations, prices are down 17% when compared to the high in February.
Meanwhile, feedback from Scandinavia indicates that the Indian market for shredded material has been strong in recent months for Northern Europe’s dealers. Owing to credit considerations, however, it is reportedly possible to make only a very limited number of contracts with buyers in Pakistan.
After a robust first quarter to 2023 driven by restocking, US domestic ferrous markets suffered three consecutive months of falling prices in quarter two. Recycled steel collections were duly dampened, helping many US dealers to resist mill moves to reduce buying prices. Traditionally, consumers resume spending on durable goods and their homes in the autumn and so restocking would be expected to return by the mid to late third quarter. As this potential upturn in demand is likely to be met with limited recycled steel supplies, it is argued that this could spark a price rally.
The recycled steel market in Japan also turned downwards in mid-March and followed that course for more than two months. Meanwhile, Japan’s recycled steel exports posted a year high in May of 591,779 tonnes and thus exceeded 500,000 tonnes for the fifth consecutive month, according to the Ministry of Finance’s trade statistics. This reflects an increase in shipments to South Korea, Taiwan and Bangladesh.
The latest “World Steel Recycling in Figures” update from the BIR Ferrous Division reveals
that the EU-27 maintained its position as the world’s leading recycled steel exporter in the first quarter of this year with a 9.2% year-on-year increase in shipped volumes to 4.885 million tonnes. The same three months brought a 24.4% slump in Turkey’s overseas recycled steel purchases to 4.929 million tonnes, with India in second place (+156.6% to 3.282 million tonnes) and the USA in third (+22.3% to 1.303 million tonnes).
With a total of 57.46 million tonnes, the world’s leading recycled steel user China consumed 0.2% more in the first quarter of 2023 than in January-March 2022, although there was a significantly steeper year-on-year increase of 6.1% in the country’s crude steel production to 261.6 million tonnes.