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International Recycling Bureau sees better times ahead in ferrous scrap

International Recycling Bureau sees better times ahead in ferrous scrap

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Published on date 29th July 2019.

London — The International Recycling Bureau (BIR) foresees "better times ahead" in the ferrous scrap market, which looks set to "finish the second half strong," with July and August sales underway after a slight uptick since June, Greg Schnitzer, President of the BIR Ferrous Division, said in a quarterly bulletin Friday. Uncertainties and variables have impacted the market this year, according to the BIR bulletin.

"This year the unusual buying pattern by Turkish steelmakers has added to an already uncertain market," Schnitzer said. In addition, "iron ore pricing sitting at close to record levels could provide the possibility of more scrap consumption versus iron ore but, once again, there are so many variables to take into consideration for that to happen," he said. Other factors recently impacting the market include summer maintenance and expensive power, he said.

"Future possible effects, meanwhile, could come from: Brexit; IMO 2020 fuel regulations; Section 232 and all other trade impacts; and new capacity. Section 232 is nothing new but, as time goes on, the feeling of a resolution grows closer.

I think we would all agree this would be a positive impact for everyone," he said. China`s scrap usage leapt again in Q1 In the first three months of 2019, there was a further 14.1% leap in China`s steel scrap usage for crude steel production to 45.6 million mt, up from 39.97 million mt for the same period in 2018 and underlying China`s position as the world`s largest steel scrap user, said Rolf Willeke, Statistics Advisor of the BIR Ferrous Division This increase is mainly due to higher pollutant emission standards for the steel industry, he said.

Most of China`s BOF mills have actively increased their scrap input and their steel scrap/crude steel ratio is currently around 25-30%. "In addition, many new scrap-intensive EAFs are being installed; indeed, worldsteel confirms that China`s electric furnace production increased from 81 million tonnes in 2017 to 121 million tonnes last year," Willeke said. BIR noted that in the first three months of 2019, steel scrap usage for crude steel production also increased in the EU-28 (up 2.3% to 23.96 million mt), the US (up 5.2% to 12 million mt), Russia (up 0.5% to 7.65 million mt) and the Republic of Korea (up 2.1% to 7.34 million mt).

Steel scrap consumption declined in Japan (down 1.5% to 8.92 million mt) and notably in Turkey (down 18.6% to 6.69 million mt). According to the Turkish Steel Producers` Association, the underlying reason was a 20% decrease in electric furnace production in the first quarter of 2019, Willeke said.

TURKEY`S Q1 IMPORTS PLUNGE 27.67% Q1 2019 brought a steep 27.6% year-on-year decline in Turkey`s overseas steel scrap purchases to 3.89 million mt. According to market participants, this is primarily attributable to additional US import tariffs on Turkish steel, sluggish long steel demand in the domestic and export markets, and the weakness of the Turkish lira.

Nevertheless, the data for the first quarter of 2019 confirms Turkey`s position as the world`s foremost steel scrap importer. Over the same period, the Republic of Korea was the world`s second-largest steel scrap importer with a 19.5% increase to 1.91 million mt, while the EU-28 remained the world`s leading steel scrap exporter, upping its outbound shipments in Q1 by 2.6% to 5.34 million mt, the main buyer being Turkey with 3.04 million mt (down 7.8% year on year), according to BIR data.

For January-March 2019, total steel scrap use in the seven key countries and regions was 112.15 million mt. Related crude steel production was around 364.9 million mt, which amounted to 82.2% of total Q1 world crude steel production, BIR said.

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