BIR World Mirror on Ferrous Metals: Swing in market mood after robust start to 2023
A concise summary of the BIR World Mirror on Ferrous Metals – Issue May 2023. Full version with detailed market reports available in the Members Only section of the BIR website.
Steel prices climbed significantly in the first quarter of this year thanks to a combination of more positive economic forecasts, the tightening supply and higher values of recycled steel, and also a sharp rise in iron ore prices. But towards the end of that period, however, market momentum began to be undermined and recycled steel prices began to fade, according to the latest edition of BIR’s Ferrous Mirror publication.
The reasons behind this market mood swing included lower-than-expected Chinese demand, not least because of the delayed recovery of its construction sector. The country’s steel mills, which had significantly increased production in anticipation of an improvement in sales prospects, were forced to sell their steel on the export market. Furthermore, the continuing devaluation pressure on the Turkish lira has made it more difficult for Turkey’s steel mills to import recycled steel.
After a robust first quarter for US recycled steel dealers and consuming mills, rising
interest rates have led to slowing demand at a time of increased supply of recycled steel. As a result, dealers are anticipating a weaker two- to three-month “summer doldrums” market, with the hope of consumers renewing purchases of more steel-intensive durable goods later in the third quarter.
In Europe, the rising cost of living has been having a direct impact on the supply of recycled steel materials, as both the public and industrial enterprises opt to postpone investments. Capacity shutdowns have been seen at several steel mills while others are operating at 50% utilization rates, with the main reason again being lack of demand for finished steel.
From the UK, it is reported that the containerized recycled steel market is now more competitive than in recent months, especially for good-quality material, with letters of credit opening up once again in Bangladesh and more recently Pakistan along with more favourable freight rates.
Following four consecutive months of gains, Japan’s recycled steel market headed lower in mid-March. According to Ministry of Finance trade statistics, the country’s recycled steel exports amounted to 575,780 tonnes in March, thereby maintaining the run of monthly totals below 600,000 tonnes since the 657,211 tonnes recorded in October 2022.
The latest “World Steel Recycling in Figures” update from the BIR Ferrous Division reveals that, despite China’s recycled steel usage dropping 4.8% in 2022 to 215.31 million tonnes, the country remained the world’s leading consumer by a considerable margin. Last year also brought a 16.5% decrease in Turkey’s overseas recycled steel purchases to 20.876 million tonnes, although again the country remained the world’s foremost importer. Meanwhile, the EU-27 maintained its position as the world’s leading recycled steel exporter in 2022 despite a 9.4% year-on-year decline in shipped volumes to 17.596 million tonnes.