On the last day of the SteelOrbis 2022 Fall Conference & 87th IREPAS Meeting held in Monaco on October 9-11, Jens Björkman from Stena Metal International, the chairman of the raw material suppliers committee, summarized the committee meeting findings stating that energy prices, especially in the EU, were the main topic of the conference. He added that during summer and autumn all-time record high levels were recorded for natural gas and electricity prices. The committee chairman indicated that interest rates have been hiked to tame inflation, pushing the US dollar to an all-time high against other currencies.
Commenting on scrap demand, Mr. Björkman said that US scrap demand had slowed down and that mills there are running at slightly lower capacities, pressuring scrap and iron ore prices, adding that supply of new production scrap which was previously in good shape has been slower. Also, for China, he noted that, despite a significant stimulus, demand for steel and raw materials has been weakening, with the outlook remaining negative. Scrap demand is significantly lower in some parts of the EU, and this has been offset by Southeast Asian demand where energy problems are not so severe. Also, logistics are another issue for the EU market given the all-time low water levels on the Rhine River, as Europe’s river system is an important part of the EU’s scrap exports. According to the Stena official, the demand situation in Turkey, which has also been struggling with high energy prices, is under pressure from alternatives to scrap such as semi-finished products, which it has been possible to get at lower price levels. Mr. Björkman explained that Turkey is not only buying Russian billet, but also ex-Asia billet, and that the pressure coming from cheaper billet is affecting Turkish mills’ ability to buy scrap. He added that, thanks to the alternative destinations for scrap such as some Asian countries, the pressure on prices in the market which Turkey was able to exert has been mitigated, though these alternative destinations are not likely to become permanent markets, and so Turkey will maintain its role in setting a benchmark in the international scrap market.
Regarding the possibility of a ban on scrap exports by the EU, Björkman said that it is becoming a likelihood and that any potential ban seemed to be targeting non-OECD countries at first, but now OECD countries seem likely to be included as well. The European Parliament will vote on a ban on November 17 and it could come into force in 2026. He added that the scrap tonnage recycled in the EU is too large, even if a few million tons will likely remain in the EU, the rest will need to find other markets.