BIR World Mirror on Ferrous Metals - Quarterly Report July 2022: Plummeting prices put a dent in scrap flows
A concise summary of the BIR World Mirror on Ferrous Metals – Quarterly Report July 2022. Full version with detailed market reports available in the Members Only section of the BIR website.
Recent months have produced huge swings in ferrous scrap prices followed by a more recent period of greater stability, albeit potentially temporary.
Amid a swathe of negative macroeconomic factors and lower growth forecasts from various economic research institutes, demand for steel turned sharply lower in the second quarter of this year, according to the latest BIR Ferrous Mirror publication. The European steel producers’ association Eurofer has lowered its forecast for European steel demand throughout 2022 from growth of just over 3% to a decline of almost 2% on the back of sharply rising energy prices, ongoing supply chain problems and the effects of the Ukraine conflict, including ongoing concerns over gas supplies.
This wall of negativity has heavily impacted international scrap markets, with Turkey’s bellwether import prices for HMS 1&2 (80:20) falling almost US$ 340 per tonne from a record high of around US$ 660. In Germany, scrap prices peaked in April but subsequently tumbled by as much as Euro 200 per tonne, depending on the grade.
The substantial price reductions have slowed the flows of material into many UK recycling facilities but, at the same time, there has been a reported resurgence in container activity as markets other than Turkey have been able to re-enter on improved terms, thus providing alternative destinations.
Across in the USA too, scrap dealers have been noting a steady decline in flows owing to the combination of price falls and summer slowdowns. Owing to this tightening availability, the downside in July scrap prices was not as bad as initially indicated. Mills are continuing to look closely at blend mixes and cost as their new steel sales margins have continued to shrink.
Although to a slightly lesser extent than in May, Japan’s domestic ferrous scrap market continued to decline in June - partly as a result of low-priced billets leaking out of Russia.
The latest “World Steel Recycling in Figures” update from the BIR Ferrous Division’s Statistics Advisor Rolf Willeke reveals that China’s steel scrap consumption was 10.7% lower in the first quarter of 2022 at 57.33 million tonnes, although the country remained the world’s largest user.
Comparing the opening three months of 2022 with the corresponding period in 2021, scrap usage also dropped in the EU-27 (-1% to 21.662 million tonnes), the USA (-1.8% to 11 million tonnes), Turkey (-1.6% to 8.286 million tonnes), Japan (-0.9% to 8.256 million tonnes) and Russia (-2.9% to 7.833 million tonnes). In contrast, a small year-on-year increase in scrap consumption was recorded by the Republic of Korea (+0.9% to 6.910 million tonnes).
Leading steel scrap importer Turkey reduced its overseas purchases by 5.3% in the first quarter of 2022 to 5.987 million tonnes, with its main suppliers being the USA (+61.3% to 1.118 million tonnes), the Netherlands (-47% to 0.546 million tonnes) and Venezuela (+183.9% to 0.440 million tonnes). The Republic of Korea became the world’s second-largest importer in this year’s first quarter (+48.1% to 1.339 million tonnes), with India in third place (-11.1% to 1.279 million tonnes).
The EU-27 remained the world’s leading steel scrap exporter in the first three months of 2022, even though its outbound shipments tumbled 26.3% during this period to 4.385 million tonnes. US steel scrap exports fell 4.7% to 3.932 million tonnes over the same period.