In a presentation at AMM and WSD’s annual Steel Success Strategies conference in New York this week, David Hodory, VP of Marketing & Communications at David J. Joseph Company (DJJ), offered his assessment of current scrap trends. Obsolete scrap supply is elastic, he said, with high demand and high volumes typically correlating to high prices. In contrast, Hodory said prime scrap supply is inelastic, and the current scrap reservoir is a “function of historic steel consumption.”
Hodory said the increase in prime scrap imports, pig iron imports, and DRI imports and production has compressed the prime to obsolete spread, and current steel to scrap spread are near—though below—the 2008 peak. Lower scrap prices this year, Hodory said, are a function of lower domestic and export demand compared to 2008.
As for global scrap markets, Hodory shared DJJ’s forecast for China’s scrap generation through 2050, showing a close correlation of total scrap consumption and scrap generation, although obsolete scrap generation is expected to follow a gradual upward trend. As such, Hodory said China is not expected to participate in scrap export markets in the near future.