Scrap at risk from towering prices - BIR

StainlessScrap at riskfrom towering pricesLast year, EU scrap exports leapt 23%to 345 000 tonnes, with principaldestinations including China, India andSouth Korea.Stainless steel scrap prices have followed nickel’s march to historicallyhigh levels. But with scrap representing stainless steel producers’main cost, a continuation of these high price levels willencourage consumers to find ways of keeping their scrap requirementsto a minimum, BIR’s Stainless Steel & Special AlloysCommittee meeting was warned.By Ian MartinThe scrap industry should look to reassure stainlesssteel producers that its materials remainthe ‘value source’ for nickel in the long term, theBIR Stainless Steel & Special Alloys Committeemeeting in Beijing was told by guest speakerMarkus Moll, Managing Director of Austria-basedSteel & Metals Market Research.A number of leading stainless steel producers -notably in Asia - were already looking at new productiontechniques which would result in a reductionof their scrap requirements. Having suggestedthat ‘all new meltshops are looking to use as littlescrap as possible’, he warned delegates that a trendin this direction could potentially ‘destroy a lot ofyour market’. Although regional variations wouldbe quite marked, the worldwide share of scrap instainless steel production was likely to decline from34.8% in 2004 to nearer 32% by 2010, predicted MrMoll.The speaker also noted that 300 series stainlesssteel had seen its share of the world stainless steelmarket fall below 65% last year. If nickel pricesremained at historically high levels, the 300 seriesratio could slump as low as 55% by the year 2015.However, he regarded this percentage as ‘the floor’since many consumers had a clear preference forthis material.Production recoveryIn his review of European market conditions,Sandro Giuliani of Italy-based Giuliani Metalli/Cronimet Group questioned whether strong demandfor austenitic stainless steel was due to real consumptiongrowth ‘or only to stock replenishment’.European stainless steel production fell by 6.6% to9.133 million tonnes last year - not least because ofthe closure of the Ardoise works in France - but outputwas expected to climb 7.4% in 2006 to 9.5 milliontonnes, he added.Turning to scrap imports from outside the EU, MrGiuliani reported that the total declined by 6% lastyear to 820 000 tonnes, of which Russia supplied43.7% and the USA 14.1%. In contrast, EU scrapexports leapt 23% to 345 000 tonnes, with principaldestinations including China, India and South Korea.In Beijing, Sandro Giuliani (left) stepped down as Chairman of the BIRStainless Steel & Special Alloys Committee stepped down in favour ofMichael Wright.Recycling International • June 2006 24

B I R B E I J I N GAccording to Ildar Neverov of TeplotovResource inRussia, increasing domestic demand for stainlesssteel scrap could lead to a reduction in his country’sexports which currently stand at around 600 000tonnes per annum. Government measures designedto eliminate VAT fraud had served to create onlyuncertainty, and ‘significant legislative improvements’were required to solve this problem and ‘makethe industry more transparent’, added the speaker.Uncharted watersBarry Hunter of US-based Hunter BenMet Assoc.contended that the stainless steel scrap market hadentered ‘uncharted waters’ in terms of wholesalebuying prices. ‘General knowledge of all availablewholesale buying prices has allowed those willing tosell material into this highly-competitive wholesalemarket to basically dictate pricing for individualloads,’ he said.Operating rates of the major US mills were ‘asclose to 100% as production will permit’ while orderbooks appeared set to remain strong throughout thethird quarter. ‘North American Stainless, perhapsour largest flat-rolled stainless producer, hasalready announced tonnage allocations for customerson new orders,’ he noted.Strong domestic demand and limited scrap availabilityhad impacted on US exports, with shipmentsdropping 15% between the final quarter of 2005 andthe first quarter of 2006. Furthermore, US exportvolumes in February and March were, respectively,30% and 35% lower than in January. For themoment, Asian buyers appeared unwilling to‘aggressively compete for material’, said Mr Hunter.Scramble for metalMr Hunter also read out the report submitted byStuart Freilich of US-based Universal Metal Corp.which pointed to continuing strong demand forhigh-temperature alloys and titanium alloys, notleast because major manufacturers were ‘scramblingto secure metal in order to increase their productionrates of military and commercial aircraft’.The ferro-titanium market had been ‘in the doldrums’during the third and fourth quarters of lastyear but was showing signs of renewed strongdemand, he added. This was helping to prompt anincrease in ferro-titanium scrap prices.After four years as Chairman of the BIR StainlessSteel & Special Alloys Committee, Mr Giulianistepped down in favour of Michael Wright, whoworks for ELG Haniel Metals Ltd in the UK.Barry Hunter of US-based Hunter BenMetAssoc. (left) and Ildar Neverov of Teplotov-Resource in Russia.Guest speaker Markus Moll, ManagingDirector of Austria-based Steel & MetalsMarket Research (SMR), and Director GeneralLindsay Millington of the British MetalsRecycling Association.