How heavy will the steady rise in ferrous exports weigh on home market prices?

Nov 01, 2009 | 04:05 AM |

Could we be heading for a battle between domestic mills and foreign steelmakers for ferrous scrap and other steelmaking raw materials? It's a definite possibility.

Mini-mills used to be restricted to the rebar and structural segment of the steel market until German engineers came up with a system called continuous strip processing (CSP). The technology gave mini-mills access to the sheet steel business, a vast and lucrative market.

They leapt into it—not just companies like Nucor Corp., Charlotte, N.C., that were already in the steel business, but also newcomers like Steel Dynamics Inc., Fort Wayne, Ind. They made sheet, but they still used the electric furnace—and scrap—to produce the hot steel that would be formed into sheet.

Some of the integrated steelmakers have disappeared in the past few years, while the others have seen their market share shrink as Nucor and others expanded.

Such an expansion was achievable because there was an abundant supply of scrap—or so it seemed. But scrap is a limited commodity. Nobody sets out to create scrap. It comes from the shredding of wrecked vehicles, the demolition of buildings and by-products of manufacturing. Scrap dealers buy and process metals that are no longer wanted and in that sense have been "recycling" even before the word was coined.....