Raw Material Suppliers at IREPAS: Main savior was Chinese demand

Monday, 21 September 2020 11:43:50 (GMT+3)   |   Istanbul

At the SteelOrbis 2020 Fall Conference & 83rd IREPAS Meeting held virtually on September 21, Jens Björkman from Stena Metal International, the chairman of the raw material suppliers committee, stated that, with the start of the pandemic, prices, demand and scrap collection crashed, noting that scrap collection halted dramatically all over the world but that in some regions the steel industries were hugely affected. The committee chairman said that, for example, in the northern EU the lockdown was less dramatic than in the southern EU, and so some raw material businesses shifted their focus to northern EU scrap-based mills. He pointed out that, once the initial effect faded, scrap prices were fairly stable from April. Looking at the summer months, Mr. Björkman said that most regions were recovering fairly quickly. He recalled that scrap prices were slightly under $300/mt in the pre-pandemic period, went down to around $220/mt, and are now back at levels similar to those before the pandemic, underlining that the main savior was China’s extreme demand for raw materials and semi-finished steel, which they imported from many regions of the world. During this period, the weakening of the US dollar also resulted in scrap prices going upwards, he noted.

Commenting on the possible impacts of the outcome of the US presidential election on the scrap markets, the raw material suppliers committee chairman said that what is important for the scrap market is investments in new melting furnaces and these capacity growth projects cannot depend on a president’s term of office. So in the long run, he said he does not expect the election to affect the steel industry, though there may be some differences in how to conduct trade.

On China becoming a net importer, Mr. Björkman said that this means China will probably have less trade frictions with the US when it comes to steel, while he sees a build-up of steel capacities outside China, namely in ASEAN countries, as being more problematic.

Regarding the outlook, while admitting that there is a lot of uncertainty about the continuation of lockdowns or possible new lockdowns, Björkman said that he is a little bit more optimistic for the demand side. The committee chairman stated that, after the initial phase of shock due to the pandemic, many have been surprised regarding the positive aspects. He added that some companies issued warnings regarding negative results, but business turned out to be better than expected in many cases, though some are still struggling.

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