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Waste & Recycling July 27, 2016 12:30:43 PM

BIR Ferrous World Mirror-July 2016: Steel scrap usage declined sharply

Paul Ploumis
ScrapMonster Author
The steel scrap usage for crude steel production recorded heavy decline in most of the major producer countries. The usage witnessed sharp decline of 19.4% in Russia to total 2.684 million tonnes.

BIR Ferrous World Mirror-July 2016: Steel scrap usage declined sharply

SPOKANE (Scrap Monster): The Bureau of International Recycling (BIR) has released the July 2016 edition of Ferrous World Mirror. The recycling body observed that excess steel production by China poses big threat to steel and ferrous scrap prices. It noted that a permanent solution to the issue can be arrived at only if China decides to cut back on actual steel production rather than cutting steel production capacities.

The governments of various steel importing countries have tightened the import rules to curb entry of Chinese steel into their market. However the Chinese steel production has not gone down. The country has continued to produce more steel. In fact, Chinese crude steel output jumped higher by 1.7% year-on-year to 69.47 million metric tons during the month of June this year. The monthly output almost touched record highs, just short of 70.65 million metric tons recorded during March.

According to William Schmiedel, president of the BIR ferrous division, Chinese administration should announce cuts in production rather than capacity cuts. It is true that the country is producing steel at lower capacities. The yearly data for 2015 indicates that the country’s production had totaled nearly 800 million metric tons, considering the fact that the total capacity had stood around 1.2 billion metric tons. The market crisis could not be solved by capacity reductions which have no impact on production, Schmiedel noted.

The scrap buying activity picked up slightly in South Korea during the month of June this year. The country booked several bulk scrap cargoes during the month, after a long gap. The scrap flow from Japan to Korea remained weak amidst weaker prices.

In the USA, busheling prices remained buoyant during end-June on account of low availability owing to drop in industrial production. The availability levels of other scrap grades such as shredded scrap remained high, mainly on account of market dumping during prior months. Meantime, the US H1 scrap average prices were at $208.50 per long ton, as on 25th July, 2016. The prices held steady upon comparison with the previous week. The H1 scrap average price in Pittsburg was $209.50 per long ton. In Chicago the prices averaged at $227.50 per long ton. The average price in Philadelphia was $188.50 per long ton.

The US scrap export market continued to remain weak. On the other hand, imports of cheaper European scrap into the US market gained momentum, on the back of rising strength in dollar. According to market participants, the trend is likely to remain unchanged in the near term.

The Japanese domestic scrap demand witnessed sharp decline on the back of production cuts announced by major mills. However, Japanese scrap export demand remained buoyant with more bookings from Vietnam. The export prices rose significantly from US$ 168.27 per tonne during early-July to as high as US$ 182.69-187.50 per tonne towards the end of the month.

Meantime, the Ukranian Parliament increased scrap ferrous metal exports duty from EUR 10 per ton to EUR 30 per ton for a period of one year.

The Turkish ferrous scrap imports totaled 4.152 million tonnes in Q1 this year, rising marginally by 0.2% when compared with the corresponding quarter last year. The imports by India jumped higher significantly by 35% year-on-year to 1.955 million tonnes. The US became the top ferrous scrap exporter to India during the previous fiscal, accounting for 17% of the total volume of ferrous scrap imports by India.

The steel scrap usage for crude steel production recorded heavy decline in most of the major producer countries. The usage witnessed sharp decline of 19.4% in Russia to total 2.684 million tonnes. The other kay countries to record drop in steel scrap usage were South Korea (6.6 million tonnes, down 8.3%), China (19.5 million tonnes, down 7.1%), Japan (9.39 million tonnes, down 6.2%) and the US (11.7 million tonnes, down 4.1%).

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