Russian scrap market in January-April

Under the conditions of growing internal demand for scrap, the imports of this raw material to Russia continue to rise. For the first four months of 2006 the volume of imported scrap to Russia exceeded the level of the same period of the last year by 32.6 percent and amounted to 1 percent of the overall domestic consumption. About 80 percent of imported scrap was used in production of crude steel and steel finished products. The rest was sent to scrap processing enterprises for re-rolling. In the period from January to March of the current year, the volume of scrap imported doubled every month. In April the increase in volume of scrap imported by Russia was equal to 43.6 percent compared to corresponding period of previous year. The main exporter of scrap to Russia for the given period was Kazakhstan. The internal consumption of scrap rose 15.6 percent year on year to 1.7 million tons in April 2006. Since the beginning of the year, the domestic consumption of scrap by the metallurgical enterprises was showing the upward trend, mainly due to the desire of Russian steelmakers to catch up with the last year volumes of production. However, the volumes of domestic deliveries were only able to exceed the last year level in April and only by 1.3 percent. However, on the background of growing domestic need in scrap, the volumes of scrap collected in the country have been showing steady decrease since the beginning of the year. By April, the volume of scrap collected was by 23.4 percent lower than during the corresponding period of the last year. Most probably, the downward tendency in the scrap collection would continue in the future, since the scrap consumption is increasing at the faster rate than the scrap collection. As far as scrap price is concerned, the Russian domestic market is becoming more interrelated with the world market for scrap, where the different tendencies on the global scrap market started to affect the Russian market at the higher degree. Thus, although during April, most of the Russian steelmakers were decreasing the procurement price of scrap, during the last week of May they were forced to raise them. The main reason for such rise is the reorienting of Russian scrap to the export direction. The secondary reasons for rise in procurement prices for scrap in the domestic market include general decrease in the domestic scrap collected volume as well as the rise in the steel production by domestic steelmakers. Russian scrap became dearer for the export directions as well. Thus, since the end of May Russian scrap became dearer by average $5-20 per ton depending on destination. Hence, on the background of the rising export prices, the volume of scrap exports continued the downward sloping. However, the general decrease in Russia's scrap exports did not affect some countries of European region. In particular, the deliveries of Russian scrap to Poland increased by 17.5 percent and that to Sweden by 2.5 times during the first quarter of 2006 from the same period of 2005. Speaking of Europe as a whole, its share in total Russian scrap exports increased to 47.4 percent. On the other hand, the deliveries to Turkey, the biggest consumer of Russian scrap, decreased 47.3 percent year on year in the first quarter of 2006. However, the share of Turkey in overall Russian scrap exports rose to 28 percent during the same period.