Posted on 10 Apr 2019
There is downward pressure on scrap prices, but availability of US and EU scrap for export has also declined and higher iron ore prices will have a knock-on effect on scrap. So said International Rebar Exporters and Producers Association (Irepas) raw materials suppliers committee chairman Jens Björkman at a meeting on Tuesday in Barcelona.
“Most scrap suppliers agree that we would probably see continued reductions before we see any better atmosphere and that’s majorly due to poor (Turkish) domestic circumstances,” he observed at the meeting attended by Kallanish.
Steel production is increasing in Asia, North Africa and South America, which is increasing scrap demand from these countries. This is to some extent offsetting reduced scrap intake by Turkey. “It’s not enough, but at least we see the market has become a little bit wider,” Björkman said.
Low water levels on the Rhine River led to a slowdown in accumulation of scrap for export in parts of the EU. The region’s automotive sector slowdown in the last six months has reduced availability of prime scrap.
US steel capacity utilisation continues at record rates, but US scrap prices are volatile. Most people are expecting scrap to decline in May as spring scrap flows increase, which will put pressure on prices.
Recent months have seen a reduction in scrap exports, partly due to reduced Turkish demand but also because of stronger demand in the US domestic market. The latter is driving down scrap availability, especially for higher-quality grades, Björkman observed.
European steel output has declined slightly so far this year but remains healthy, meaning intra-EU scrap trade remains active. The differential between intra-EU scrap prices and exports to Turkey has narrowed, reducing interest to ship scrap deep-sea.
Vale’s planned iron ore output reduction will raise ore prices at least in the next few years. This will likely add to China’s push to use more scrap in steelmaking, Björkman concluded.
