Warning over steel recycling market uncertainty

The steel recycling industry is facing a period of uncertainty, despite an expected increase in levels of stainless steel production for the remainder of 2010, according to the former president of the British Metals Recycling Association.

Speaking at the Bureau of International Recycling's (BIR) World Recycling Convention in Brussels last week (October 25-26), Michael Wright, chief operating officer for ELG Haniel, claimed that the sector had been hit by a slowdown in stainless steel production in the third quarter of 2010.

And, he said that, while global stainless steel production was still to increase by 20% this year to around 30 million tonnes, “short-term” ordering by consumers was creating uncertainty for steel recyclers.

Mr Wright, who is chairman of the BIR's Stainless Steep & Special Alloys Committee told delegates at the event that “everything is on a short-term basis”.

However, the event also heard that imports of stainless steel scrap had increased in most markets, with India boosting its overseas orders by around 32% compared to last year and the global availability of steel scrap jumping by 20%.

This was qualified by Mr Wright who noted that China was an exception to the upward import trend because “scrap is in direct competition with the growing production of nickel pig iron”.

Non-ferrous

In terms of non-ferrous metals, the convention heard that demand for scrap has been “resurgent” in 2010, after the downturn in the market in late 2008 and early 2008.

The BIR's Non-Ferrous Metals Division's president, Robert Stein of US-based Alter Trading, told the event that: “We again found ourselves as the fuel for the demand of the emerging economies of the world – as providers of ecologically-viable alternatives to primary metals to growing but mineral-deficient nations.”

But, he claimed that the sector was suffering from “too many limitations and obstacles” from governments, and added: “Our scrap metal should be treated on an equal footing with its primary counterparts.”

UK-based Robert Voss, of Voss International, reported trade barrier developments in a number of countries, including Sri Lanka and the East African region, as well as urging BIR members to keep the organisation informed of any other moves that could impair imports or exports of recyclables such as non-ferrous scrap.

Prices

Also at the event, William Adams, head of research for UK-based FastMarkets, claimed that prices for all non-ferrous metals would push up over time as part of a “super-cycle” driven growth in rapidly-developing economics and supported by “slow but volume growth” in mature economies.

Commenting the rebound in non-ferrous prices, he said: “It looks as though investors have latched on to the belief that the super-cycle will drive community demand and there will be supply shortages in the years ahead.”

But, he claimed that current high prices were “not justified”, so there was a “considerable risk of downside corrections.”