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LONDON (Scrap Monster): Over capacity in the steel industry in China, world’s leading steel consumer, is expected to reach 300 million tons in the long run, as per experts viewpoint, was revealed in the Ferrous World Mirror produced by BIR world recycling organization.  Meanwhile, Chinese scrap imports fell 4.2% year on year to 1.291 million tonnes in 2012.

Also, China’s steel scrap consumption dropped 10.1% to 21.3 million tonnes despite a 2.5% increase in the country’s crude steel production.

Christian Rubach of TSR Recycling, who is also the president of BIR Ferrous Division pointed out that overcapacity in the steel industry, has become a topic of significant public debate for the fist time in almost a decade.

Rubach goes on to highlight the fact that EU exports of steel scrap are running at an annualised rate of 25 million tons - ‘a level which has never been seen before’ and an illustration, he adds, of ‘the extreme importance of free and fair trade and of open markets’.

Given concerns over, among other matters, energy cost increases, a weak Euro, China’s economic slow-down and ‘sputtering’ growth in India, buyers and sellers of scrap will probably minimise inventory and other costs in the near term, leading to ‘very tight’ supply lines, he says.

 In the January-March 2012 update of ‘World Steel Recycling in Figures’, compiled by the BIR Ferrous Division’s Statistics Advisor Rolf Willeke, it has been revealed that the EU-27 overtook the USA as the world’s leading exporter of steel scrap.

The EU’s total exports leapt 38.3% to 6.152 million tonnes in the first three months of this year whereas America’s overseas shipments climbed 7.7% to 5.439 million tonnes.

Turkey’s steel scrap consumption and its domestic steel production both jumped 13.8% in the first quarter of 2012, the former to 8.1 million tonnes.

Steel scrap usage in the EU-27 fell 5% to 24.7 million tonnes whereas steel output in the region was only 3.9% lower than it had been in the opening three months of last year.

According to Hisatoshi Kojo of Metz Corporation in Japan, the domestic H-2 scrap price was approximately Yen 27 000 per tonne fob (US$ 341.77) at the end of June but can be expected to hover around Yen 26 000-26 500 (US$ 329.11-335.44) in the coming months, partly because electric arc furnace steelmakers tend to cut production over the summer. ‘Once shipment of outstanding July/August contracts is completed, it might prove difficult to sustain the current market level,’ he adds.

Steel scrap prices in Russia spent the second quarter of 2012 in decline but scrap deliveries did not decrease despite the low values reached by June, observes Andrey Moiseenko of Ukrmet Ltd. Further erosion is anticipated until the end of the summer when steel mills usually start to build ‘winter stock’.

In India, the scrap market is weak and prices are around US$ 410-415 per tonne cfr Nhava Sheva for shredded scrap in containers, according to Zain Nathani of the Nathani Group of Companies.