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Steel falling short on US scrap usage: Danjczek

Keywords: Tags  steel, scrap metal, Steel Manufacturers Association, Thomas A. Danjczek, Institute for Scrap Recycling Industries, ISRI, OmniSource, Rich Brady direct-reduced iron

LAS VEGAS — The U.S. steel industry does "not satisfy" the domestic scrap metal market, former Steel Manufacturers Association president Thomas A. Danjczek said at the Institute for Scrap Recycling Industries’ annual convention in Las Vegas, noting a "significant amount of (steel) imports that could be replaced" by domestic production.

While "the North American steel market has shown real resiliency" in recent years, the industry "ought to use more scrap here," Danjczek said in the "Spotlight on Ferrous" panel. He noted the "importance of self-sufficiency" within the domestic steel industry and cited "real benefits" of increased steel production for steelmakers and the scrap industry.

The U.S. steel market imports about 30 percent of its material, Danjczek said, adding that the industry is "cyclical in performance, but not in volume."

Rich Brady, executive vice president of Fort Wayne, Ind.-based OmniSource Corp.’s southeast operations, also spoke on the panel and discussed the increasing number of shredders in the scrap industry. "People recognize that it’s an efficient way to process these materials," he said, highlighting the "need to be a low-cost producer" in today’s market.

Brady described the possibility of more mergers and acquisitions within the industry as an "interesting experiment" in an effort to deal with margin compression and other challenges.

"Ultimately, if there are those opportunities, they’ll be more regional in nature," he suggested, citing the "freight-sensitive" nature of the market.

The panel also discussed the steel industry’s investment in the production of direct-reduced iron (DRI), with Danjczek noting that he didn’t believe the material can be considered a steel scrap substitute.

"I would tell you the growth of DRI will actually cause more scrap to be used in the U.S.," he said. "I believe if DRI growth continues ... I think we’ll consume more scrap, because we’ll have more (electric-arc furnaces)."

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