The scrap market collapses: never so low in the last 11 years

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Low cost steel from China is why. All the figures in the report made by the Bureau of International Recycling.

Steel along the silk road. A huge amount, and cheap, comes from China and creates difficulties for the Western scrap market. The People’s Republic’s continuous steel exports, both in the form of semi-finished and finished products, made scrap metal prices plunge to levels never seen in the past 11 years.

“Our industry needs to find new ways to compete – says William Schmiedel, president of ferrous material division at the Bureau of International Recycling (BIR) – We can not wait for the market to help us, we need to focus on what we can control, such as our prices and production rationalisation”. Between July and August, China exported 19 million tons of steel. A huge figure but nothing in comparison with the 11.3 million tons of exports in September.

In the European market you can find Chinese billets at about 260 dollars per ton, with a reduction of 80 dollars from July. These prices have had a negative impact throughout the European Union, with some operators claiming that volumes have dropped by 40%. In the US, in the last four months, scrap stocks have exceeded the demand on behalf of steel plants and this has resulted in a continuous fall in prices. A position of weakness which would seem to persist even in November.

BIR, in its report “World Steel Recycling in Figures”, highlights the rapid fall in the use of scrap steel in China (-9.3%, 43.1 million tons), Japan (-10, 3%, 17.03 million tons), South Korea (-10.1%, 15.17 million tons) and Turkey (-10.3%, 13.21 million tons) in the first half of 2015.

In all cases, the decline in scrap use has been sharper than the decline in raw steel production. From January to June 2015, the biggest importer of scrap steel, Turkey, has reduced its overseas purchases by 12.9%.

Europe, with all its 28 members, remains the leading exporter, despite the sharp fall of 12.1%, while US deliveries fell by 9.1%.

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