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Outokumpu's Ala. mill may hit scrap supply

Keywords: Tags  Outokumpu, Calvert mill, Alabama mill, stainless scrap, stainless scrap exports, Daniel Fitzgerald

NEW YORK — Stainless scrap market participants are backing an analyst's prediction that the ramp-up of Outokumpu Oyj’s mill in Calvert, Ala., could push the U.S. market into deficit.

"The U.S. could turn from a net exporter to a net importer (of stainless scrap) when Outokumpu’s Calvert plant is in full operation," Markus Moll, managing director of Austria’s Steel & Metals Market Research GmbH (SMR), said last week at the Metals Service Center Institute’s Specialty Metals Division Conference in Carlsbad, Calif.

"For the United States market, the scrap was always an advantage because you can buy it at the best terms here. And Outokumpu will probably use that advantage," he said. "Probably a few years from now there will be no scrap going eastbound for Asia."

The Calvert plant is likely to draw a significant amount of scrap from the market, scrap market participants told AMM, but they don’t expect this to happen until the facility approaches full capacity.

"If they’re going to go anywhere near their boilerplate capacity, it’s likely that North America will be in a scrap deficit. But they’re not there now and the traditional scrap export markets that the U.S. fills aren’t that great. ... Scrap could be a little tight moving forward, but I think we’d have to see a significant increase in U.S. production and export demand (for that to happen)," one scrap processor said.

"If Calvert goes toward even 80-percent capacity, then it’s probably going to get tight, but it’s down the road a ways," he added.

A scrap dealer agreed that the trend wouldn’t play out until the Calvert site ramped up further, noting that it will likely source the majority of its scrap from the U.S. Southeast.

"Supposedly, they’re going to use 150,000 tons of scrap a year, but I’m not sure about that until I see it happen," he said.

"They’re not going to be a serious player (in scrap buying) this year," a second processor added.

The Calvert facility is expected to reach its full capacity of 75,000 tons per month in 2015, Outokumpu told AMM in January.

A spokesman for Outokumpu declined to comment.

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