Speaking at the SteelOrbis 2016 Spring Conference & 74th IREPAS Meeting being held in Lisbon on April 10-12, Jens Björkman from Stena Metal International, the chairman of the raw material suppliers committee, said that the markets are looking a little bit better this time, adding that the general feeling among committee members is that the current conditions are a lot more sustainable and that the environment has improved a lot for business in general. He pointed out that raw material prices bottomed out soon after the last IREPAS meeting held in Rome [4-6 October, 2015].
Mr. Björkman indicated that the business environment for raw materials is healthier now due to the weaker US dollar, which has hit its lowest level in 17 months, and the Chinese government’s decision to cut capacity. The raw material committee chairman stated that the lower volume of billet exports from China gave way to increased scrap purchasing in the markets, resulting in a healthier balance between billet and scrap volumes.
According to the committee chairman, protectionism is also an important factor contributing to stronger scrap demand, adding that US domestic demand for steel products has pushed scrap prices up. Commenting on India’s minimum import price, Mr. Björkman said that the implementation of this measure has increased scrap shipments to India and he expects that the minimum import price will be extended for another six months. He also said that the committee does not expect any sudden change in the €10/mt scrap export duty in Ukraine.
In response to a question on whether the major iron ore suppliers are trying to push the small ones out by lowering prices so that they will be able to increase their prices at will once the smaller producers are out of the way, Mr. Björkman said that the major producers are trying to keep their prices low due to their shareholders who expect higher dividends.