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Ferrous scrap mart braces for global weakness

Keywords: Tags  Christian Rubach, Bureau of International Recycling, Tom Bird, European Ferrous Recovery & Recycling Federation, Hisatoshi Kojo, Metz Corp., Blake Kelley, Sims Metal Management Steel First

SHANGHAI — Ferrous scrap participants globally are bracing themselves for a weaker market for the remainder of 2013 against slow demand in the steel sector, a theme that dominated proceedings during a session at this week’s Bureau of International Recycling (BIR) conference in Shanghai.

"The mood for many of us in the steel recycling industry is not so optimistic anymore, especially for those who do their business in Europe," Christian Rubach, president of BIR’s ferrous division, told delegates.

Europe is the biggest recycling sector in the world but has suffered considerably from the financial crisis, austerity programs and low consumption, he said.

Tom Bird, president of the European Ferrous Recovery & Recycling Federation, said scrap continues to be offered in abundance to Turkey—the world’s largest scrap importer—from Europe, the Baltics and the United States, prompting weaker prices.

"As always in a market such as this, what appears to be a distress sale today turns out to be a good deal tomorrow. Prices have continued to weaken during the month and we could see further reductions for June across the board. We are seeing prices continue to soften into both Turkey and Spain, driving the EU market down," he said.

He said 2013 was proving to be a difficult year for ferrous scrap recyclers.

"After a fairly positive start to the year, the market has gradually tightened through April and May. A great deal will depend on steel demand moving forward, but the reality is the remainder of 2013 poses a challenge," Bird said.

Japan, on the other hand, appeared to be the only bright spot in a market where prices seemed to be heading lower worldwide.

Scrapyard dealers are getting quite a lot of inquiries, with the current weakness of the yen favoring exporters, according to Metz Corp.’s Hisatoshi Kojo, a board member in BIR’s ferrous division.

"With the weaker yen, Japanese scrap appears to be a good bargain on a U.S.-dollar basis, and there are inquiries received from Taiwan and Vietnam. Indeed, the conclusion of a contract was reported at $360 to $365 per tonne c.f.r. for May/June shipment," he said.

Consequently, there were movements from mills in South Korea—the largest buyer of Japanese scrap—to raise their bidding prices to 32,500 to 33,000 yen ($325 to $328) per tonne f.o.b., he said.

Blake Kelley of Sims Metal Management Ltd. noted that while the weaker yen encourages exports, it also makes imports of iron ore and coking coal relatively more expensive, so increased domestic scrap consumption in Japan may result.

Kojo noted that Japanese blast-furnace-based mills have restarted purchases of domestic prime grade scrap since April.

A version of this article was first published by AMM sister publication Steel First.

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