In a ferrous market report published yesterday (15 February), the division’s new president, Shane Mellor of Mellor Metals and Harry Seale of Atlas Commodities both painted a positive outlook for the coming years, despite short-term challenges.
UK steelmaking
Mr Seale explained that a lot of media attention recently has focused on the UK steel sector, specifically the move away from “antiquated” basic oxygen furnace (BOF) technology while transitioning to “greener, more sustainable and less carbon-intensive” electric arc furnace (EAF) steelmaking
He explained: “The UK produces around 11 million tonnes of recycled steel each year, of which less than 3 million tonnes is consumed domestically, making this country the world’s largest exporter of recycled steel on a per capita basis and the second largest in absolute terms.
“The next five years will be transformative and the transition from BOF to EAF will require far more of the recycled steel generated in the UK to be melted domestically.”
Mr Seale added that the current, “pitiful levels” of UK demand for recycled steel have made, and continue to make, conditions challenging and exports a necessity. He noted that Tata “has reduced both production and recycled steel usage owing to ageing assets and melt consistency challenges, while also planning – as recently announced – to dead-stop melting entirely by the fourth quarter of 2024 for a prolonged period”.
Furthermore, Celsa group’s “poor downstream demand and wider company restructuring have seen it reduce its scrap requirement significantly”, while British Steel and Liberty Steel are also operating at “extremely low capacity utilisation rates and are therefore not regularly in the market for recycled steel”.
President
In his first update as the new president of the ferrous division, Mr Mellor also sounded a positive note about the coming years.
He said the industry will be subjected to “some radical and fundemental changes”, with high-quality recycled metal products “being increasingly in demand”.
He added: “I also believe that it has never been more important to understand how global trade flows are changing, in particular the industry challenges surrounding current trade barriers and disrupted traditional shipping routes, as well as the longer-term industry desire for a ‘green steel’ evolution.”
Short-term
While the medium to long-term outlook remains positive, there are many challenges being face by exporters at the moment.
Mr Seale added that towards the end of last year, demand and relative pricing for containerised recycled steel to the Indian Subcontinent and the Far East “held out”, but the resultant freight increases of around US$ 1000 per TEU (US$ 40 per tonne) “effectively destroyed demand and viability overnight for containerized recycled steel exports from the UK”.
He added: “Mills across Bangladesh and Pakistan had already been on the sidelines, battling their own macro-economic crises driven by a lack of foreign currency reserves and significant political uncertainty and instability in both countries, which have been significant barriers to trade throughout the final quarter of 2023 and the opening weeks of 2024.”
World Market
Providing a more global outlook, Rolf Willeke, statistics advisor of the BIR ferrous division highlighted that global crude steel production had slightly increased.
He said: “In the first nine months of 2023, global crude steel production totalled 1.407 billion tonnes for a small increase of 0.08% over the same period in 2022, according to world steel.”
Subscribe for free