ISTANBUL Turkish demand for U.S. ferrous scrap will grow in the coming years as supplies from another major exporting region decline, according to an industry executive.
Black Sea scrap exports from Russia and Ukraine to Turkey are falling, Yusuf Guven, director of Geneva-based Helveco Intertrade SA, told delegates at AMM sister publication Metal Bulletins Steel Success Strategies conference in Istanbul. "The main reason this is happening is their own need. Domestic demand for scrap is increasing as production is increasing."
As a result, Guven predicts demand for scrap from the United States and elsewhere in North America will increase in the near term.
A market participant from Russia agreed with the outlook, but said he wasnt sure if the United States could bridge the gap. "The scrap reservoir in Russia decreased significantly and consumption is increasing," Yuri Mishin, director of trade policy at Moscow-based Metalloinvest Holding Co., said. "I dont know if the U.S. can keep up its high recycling rates, so I think its total export volume could drop. In times of high prices, you take more from the scrap reservoir, and its difficult to maintain that rate, especially when prices soften."
If U.S. and Black Sea exports drop in the coming years, Turkey could turn to China as a supplier, he added.
Alberto Hassan, president of the International Iron Metallics Association, said that overall U.S. scrap collections are set to decline in the coming years as the metal mix in auto production changes.
"The average life of U.S. cars on the road has increased to between 12 and 18 years now due to reuse. Cars are also lighter today and carry more nonferrous material and galvanized steel. As these cars enter the recycling stream in later years, there will be less steel scrap generated," he said.
Chinese and Indian scrap demand also could rise this year as steel consumption is projected to grow about 4 to 5 percent.
Jiang Li, chief market analyst at Shanghai-based Baosteel Group Corp., said that Chinas apparent steel consumption will rise in 2013 because it is the first year of a new government. "Normally, fixed-asset investments are higher in the first year of a new government," she said. Li added that restocking will be another demand driver.
In India, nearly 25 million tons of new capacity projects are underway and current mills will run at 88 percent of capacity, according to Ravi Uppal, managing director and chief executive of New Delhi-based Jindal Steel & Power Ltd. "Growth in demand for steel (in) India will be 55 percent in 2013, and Jindal will double its capacity by the end of this year from 3.2 million tonnes per year to 7.1 million tonnes and then to 12 million tonnes by 2015," he said.
New capacity build-up in India by large producers such as Mumbai-based O.P. Jindal Group, Mumbai-based Tata Steel Ltd. and New Delhi-based Steel Authority of India Ltd. will add 25 million tonnes to Indias production capacity by 2015, according to Uppal.
"We are in (a period of) major infrastructure growth, and the government of India has allocated $1.6 trillion for infrastructural projects," he said.