Ferrous Scrap and Steel Markets: Key Trends in Asia, MEA and Beyond

In the recently concluded Metals Recycling Confex MEA, experts spoke about recent developments in the iron and steel industry.


May 15 2023
 
Share this story
 
 

Get the latest news and market insights delivered to your inbox.

 

In the recently concluded Metals Recycling Confex, Lee Allen, Strategic Markets Editor, Scrap Fastmarkets, and Jawed Ahmed, Chairman and CEO at Al Qaryan International, Dubai, spoke about the ferrous market in Asia, MEA and Europe in a fireside chat with Eng. Satyajit Roy, Director, Elegant Exit Company. The discussion followed a presentation by Allen.

Allen highlighted how Asia has been witnessing a stronger steel growth in the last few years. Comparing the steel output from 2021 to 2022, he showed that across the Middle East and South Asia, particularly India and Bangladesh, there was an increase in steel output last year. However, China’s output had dropped by 2%. “China had an underwhelming year when it came to the economy last year, and the steel output definitely mirrors that.” He pointed out how a recessionary environment across many developed worlds could have an impact on the steel demands and output this year.

Speaking about the emerging trends in steel scrap trade, he said that India and Bangladesh have been increasing their share in the world’s trade of steel scrap. But Turkey has had a difficult 2022.

Turkey, from being the dominant scrap importer in the world, has actually been losing its grip, he said adding, “Countries such as India and Bangladesh have been increasingly competing for volumes against Turkey, and that has provided European exporters with more choice when it comes to who they are gonna sell their scrap cargo to. It’s not just Turkey anymore.”

Talking about the steel scrap prices, he said, steel scrap prices are now back to the levels they were in May 2022.

He later explained how the devastating earthquakes in Turkey and Syria have resulted in demand for 5 million tonnes of steel in the Turkish local market to complete the rebuilding project.

Speaking about the increase in construction in India and Pakistan, He said this trend will lead to higher electric arc furnace melting rates in India in the final quarter of 2022 compared with previous years. Expected increase in construction, auto production and industrial production in India will lead to India being home to the fastest growing metropolises in the world this year.

He also touched on the challenges in front of the steel scrap industry. “In the global market, South Africa introduced an export ban in November, 2022; Russia has steel scrap export quotas in place; the United Arab Emirates has an official ban on the export of steel scrap; and the EU, will be introducing a restriction based on the waste shipment regulation, which will make it much more difficult to export steel scrap to the non-OECD countries.

Recovery after COVID-19 pandemic

The fireside chat began with a discussion on the recovery of the ferrous market after the COVID-19 pandemic. Jawed Ahmed said, “Post Covid, there have been a lot of changes. When the lockdown was imposed, it was thought that everything would come to a standstill, but countries came together to mobilise money into the market to ensure the supply and demand was balanced.

Even though shipping and logistics were affected, the industry survived. After Covid, the oil industry bounced back and so did many other industries,” he said adding, “I’m positive, in time, the supply chain will Improve.”

Commenting about the steel pricing, Allen said, “The reasons for higher steel prices at the moment are the supportive downstream factors and supply dislocation. After the escalation in the Russian-Ukraine conflict, a lot of materials, hitherto exported from these regions, had to be sourced elsewhere. In fact, Turkey was one of the main markets selling these steels such as slabs, coils, billets into Europe and North Africa.” “Now,” he said, “Europe is sourcing these materials from Asia.” He attributed the price changes to supply shocks and forecasted an increase in demand for HRC in Europe in the second quarter of 2023 and a ‘rosy outlook’ for steel prices.

To a question on scrap usage in steel production, Mr. Ahmed said that it is a welcome move that more and more primary producers are using scrap in the steel production. The world is moving towards a circular economy for which steps such as recycling and energy saving are vital, he said, adding, “The future is safe.”

On EU waste shipment regulations

“The EU waste shipment regulation overhaul is going to make it much more difficult than it is now for European nations to export lower grade scrap to non-OECD countries,” said Allen.

He cited the example of how HMS export to India, Pakistan, Bangladesh, and Africa will be tough. The European Union wants to keep as much of its resources within the country as possible. noted Allen when commenting about how the waste shipment regulation of the EU will affect the steel industry. “Anything that will be exported will be high grade material.” He also spoke about the conditions under which one can still export to non OCED countries after the overhaul comes into effect.

“The regulations are not agreed on yet. It still has to go through the European Council in June or July. There will then be an implementation period, which I believe should take around two to three years. By around 2026, this regulation will come into force. So, mills in Asia, trading companies, exporters, got enough time to kind of analyze this. It is disruptive for both the export market and the European market.”

He pointed out that this will have an impact on the price and collection of scrap in Europe. “We might even see more cars being abandoned in fields in Europe if there is no stimulus to actually collect it and sell it for export. So it is a very divisive issue and there is still a lot to comment.”

He later spoke about the carbon tax and how the EU tries to ensure materials imported are compliant with this climate and emission regulations. He pointed out that DRI-based steel making, and scrapbased steel making, which are in practice in the Middle East, are certainly a lot less polluting than blast furnace steel making going on in India or China. “So, if carbon taxes come into effect, it will be more favorable for the Middle East.”

Source right

Ahmed stressed that steel producers should ensure that they get the material from the right source, treat them well, and then process them the right way. The Middle East has been taking initiative since a long time and Saudi Arabia has been producing the best steel through the DRI way.

Speaking about the ban on export of metal scrap that some countries have imposed, Ahmed said, “If a country has the capacity to convert waste into products, it would be in its best interest.” In the GCC, most countries face local shortages, hence they import and have some kind of an export ban, he added.

“On the other hand, India and China export metal with value addition, not just as scrap or raw material. I believe this will become the norm in the next 10 to 15 years. He said he favours the ban on export of metals if the country is able to utilise the scrap for its own consumption.”

Allen spoke about the market factors that dictate whether a country should or shouldn’t ban scrap. Some countries want to ban scrap as they wish to meet their demands. “The European Union only exports scrap because it’s got more scrap generated than it gets consumed.”

The panelists later discussed pricing mechanisms in India, Turkey and the Middle East and the factors affecting it.