BIR World Mirror on Ferrous Metals: New year, new hope
A concise summary of the BIR World Mirror on Ferrous Metals – Issue February 2023. Full version with detailed market reports available in the Members Only section of the BIR website.
A troubled 2022 ended with an upturn in sentiment within the ferrous scrap sector that has largely persisted into 2023, according to the latest edition of BIR’s Ferrous Mirror publication.
The more positive climate has been particularly noticeable in the USA where scrap dealers had endured seven months of falling markets in 2022 on the back of decreasing new steel prices, weak export markets and a more than adequate supply of ferrous scrap. However, a tipping point was reached in December, since when there have been three consecutive months of price gains on the back of tighter scrap supply exacerbated by persistent bad weather in many parts of the country. Strong export markets and rising new steel prices have also played their part in this turnaround.
While the pace of Federal Reserve interest rate hikes is slowing in the USA, many countries in Europe are continuing to take more drastic action in their bid to control inflationary pressure, although this has not prevented some upward scrap price movements in domestic and export markets at the start of 2023. Challenges for European scrap businesses remain numerous, including low levels of infeed into processing facilities, worker shortages, high energy/inflationary costs and difficulties in obtaining letters of credit, particularly in Pakistan and Bangladesh.
These more positive market conditions at the start of 2023 build on the optimism generated by the Chinese government’s launch of additional stimulus measures, including a move away from its strict zero-COVID policy. However, a New Year rally in China has been followed by weaker demand, it is suggested.
Although the devastation caused by the earthquakes in Turkey and Syria has yet to be fully quantified, it seems certain that there will be significant market repercussions, especially as Turkey has long been the world’s largest importer of steel scrap. In early February, market activity has largely stalled as priority is given to the enormous humanitarian need created by this natural disaster.
In 2022, the ferrous scrap market in Japan hit its highest level since 2008, with prices kept elevated by the depreciation of the yen to its lowest level against the US dollar in some 32 years. Not least because of significant steel production cuts in Vietnam, Japanese ferrous scrap exports slid 13.6% last year to 6.307 million tonnes - the first time the annual total had fallen below 7 million tonnes since the 5.442 million tonnes recorded in 2011.
From among the statistics contained in the latest “World Steel Recycling in Figures” update from the BIR Ferrous Division, it emerges that China’s steel scrap consumption in the first nine months of 2022 was 6.7% lower year on year at 170.83 million tonnes - a decline that was steeper than the 3.4% drop in the country’s crude steel production. However, China remained the world’s largest steel scrap user.
Having lost top spot in the first half of 2022, the EU-27 regained its position as the world’s leading steel scrap exporter when viewed over the first nine months of last year; this was despite a 9.1% year-on-year decline in shipped volumes to 13.268 million tonnes. The same nine-month period also brought a 6.5% year-on-year fall in steel scrap exports from the USA to 13.045 million tonnes.