Roles in the scrap market might change in the near future

During the sessions of "1st CIS Steel and Raw Materials in the World Markets" conference in Kiev, the participants including the representatives of the Metal Courier and Mair discussed the scrap situation and possible prospects of this market. In the year 2005, collection of scrap reached its maximum level in the CIS region. It was approximately 4% above the year 2004 level. In the same period, exports have dropped by 5%. The expectation for the year 2006 is that the local demand will grow, mainly due to the conversion of steel plants from integrated to electric arc furnace mini mills. Besides this growth in local demand, the collection may not be further expanded, according to industry specialists, as it is already reached a saturated level. The main two reasons for the collection not to expand in serious volume are the unlikelihood of the further price growth, on the back of the recently experienced sharp rises, and the limited ability of scrap collection. The expectation is that there will be only a few companies left that will be involved in collection as it not seen as an effective way of investing anymore. Scrap prices grew in the first three month period of year 2006, and compared to the same period of last year, the prices are much higher. Today, having gone through the seasonal obstacles, namely the frosts the supply problems are finally overcome. In this respect, industry experts expect a dramatic drop of CIS scrap prices in May. As longer term expectancy, domestic demand in Russia will continue growing, accompanied with reduced export volumes. The participants indicated that Ukraine in the near future could cease to be a player in the scrap export market, in close connection to the growing demand in its domestic market.