Receding tide. (Ferrous).

Reduced demand in several scrap-consuming nations has led to slowly falling ferrous scrap prices in much of the world, according to several speakers who addressed attendees of the Bureau of International Recycling (BIR) spring convention, held in late May in Oslo.

Anton Van Genuchten of TSR GmbH & Co. in Germany predicted in his European Union report that the scrap price decline of April and May would continue into June because of "almost non-existent" demand from Turkey; the resumption of scrap supply from Eastern European seaports to Western European markets; and a reduction in orders from Asia, notably China.

Sun Jiansheng of the China Association of Metal Scrap Utilization noted that his country's steel output increased by 18 percent in the first quarter of 2003 and that the total increase in production during 2003 could reach 27 million metric tons. "As a result," he said, "there will be an additional 4.66 million metric tons of steel scrap needed for steelmaking." But he expected China's domestic scrap resources to grow by 4.6 million metric tons this year.

Colin Iles and Mark Priestman of European Metal Recycling in the U.K. gave a more upbeat report. EAF steelmaking production has resumed this year at Alphasteel in Wales, while the mill in Sheerness, U.K., through new company Thamesteel, has resumed melting activities. A mill in Cardiff, Wales, under the CELSA brand name is also expected to return to melting.

Robert Philip of Hugo Neu Schnitzer Global Trade gave a somewhat less encouraging report from the U.S. He pointed to "some cooling off of export demand and retraction in prices on the export side," as well as to the adverse impact of a "very sluggish" U.S. economic outlook on steel consumption.

Scrap dealers throughout the world are keeping an eye on Eastern Europe, where the strength of the steelmaking lobby in Russia and the Ukraine seems likely to ensure a continuation of those two countries' scrap export tariffs. Denis Ilatovsky of Mair Joint Stock Co. in Russia says, "no major changes" are anticipated to the duty in the Ukraine, helping to reduce the country's scrap exports from 710,000 metric tons in the first quarter of 2002 to 203,000 metric tons in the same period this year.

No. 1 Heavy Melt Composite Pricing

(per gross ton, monthly average)

May02   $101.53
June    $101.60
July    $101.67
Aug     $101.67
Sept    $103.62
Oct     $103.12
Nov      $97.25
Dec      $97.00
Jan03   $106.41
Feb     $115.91
Mar     $120.42
April   $119.80
May     $109.04

Source: American Metal Market

Note: Table made from bar graph.