Global ferrous scrap trade expected to remain at 66-68 mnt in 2021

The total global seaborne trade in ferrous scrap in the first half of calendar year 2021 (H1CY'21) is up 11% y-o-y to 33.22 million tonnes (mn t), compared to 29.91 mn t seen in H1CY'20, as per SteelMint's data. In the full year of 2020 (CY'20), the total volume was almost 66.36 mn t, a marginal increase of 1.3% against 65.5 mn t in CY'19.

The top seven-odd importers of Turkey, Vietnam, Bangladesh, USA, Pakistan, South Korea and India comprise 80% of the global ferrous scrap imports market.

However, in a Covid-scarred CY'21, plagued by infections, lockdowns and low steel consumption, imports of ferrous scrap - provided H1 volumes sustain or increase marginally in H2 - are expected to remain almost flat. We expect total global trade ferrous scrap to be in the range of 66-68 mnt for the year 2021.

List of top ferrous scrap importers -

Turkey: The world's largest ferrous scrap importer, has seen a sharp 28% rise in H1CY'21 to 12.40 mn t compared to 9.69 mn t in H1CY'20. Its total imports in CY'20 was at 22.16 mn t. The imports rose in H1CY'21 because of a sharp 21% increase in its crude steel production in the same period. The increased crude steel production necessitated higher imports of the raw material as well.

If Turkey continues to import at this rate, its imports, by the end of CY'21 would probably be at around 23-25 mn t.

Vietnam: Among South East Asian countries, Vietnam is a key scrap importer. Its scrap imports volumes were up a significant 23% to 3.05 mn t in H1CY'21 compared to 2.48 mn t in the same period last year. Here too increasing steel capacities in H1 whetted the appetite for scrap. Moreover, these mills were actively exporting billets, for which they needed the raw material.

The country has been badly hit by Covid, which has dented domestic steel demand. However, post-lockdown, when economic activities resume, scrap imports may sustain. Its Jul'21 imports were at 0.66 mn t and if this rate prevails throughout the rest of the year, then a volume similar to H1 can be expected in H2. Total volumes in CY'20 was at almost 6 mn t.

Global ferrous scrap trade

Fig in mn t
Source: SteelMint Research

Bangladesh and Pakistan: Both these South Asian countries have been stable in their imports in the first half. Pakistan's volumes rose a modest 10% to 2.03 mn t in H1CY'21 compared to 1.84 mn t in H1CY'20 while Bangladesh' imports are provisionally at 2.7 mn t, a tad lower than 2.9 in the same period last year.

Pakistan has been doing comparatively better than other South Asian countries, because mills here have no other substitute for raw material and are fully dependent on scrap.

Both countries have been impacted by lockdowns and overall steel consumption has dropped. So, one can expect CY'21 scrap imports to be similar to CY'20 levels.

India: Its imports dropped a provisional 36% to1.7 mn t in H1CY'21 as against 2.32 mn t seen in the same period last calendar. The lower volumes have been mainly on account of global and domestic price disparities which led to lower import bookings. Consequently, the smaller mills have been shifting to domestic scrap or sponge iron to reduce the cost of production.

India's imports in H2 will possibly go down since not many bookings have been heard on account of the higher global prices. CY'20's ferrous scrap imports totalled 4.34 mn t which is lower compared to the 5-6 mn t India usually imported in the pre-Covid era. If imports sustain at the present rate then another 1.5-2 mn t can be expected in H2CY'21.

China: Lifting of restrictions earlier this year led to an increase in imports, especially from Japan.

When China eased its import policy in 2019, global steel circles expected it would sweep 10-12 mn t of ferrous scrap into its shores. However, H1 figures show it imported only 0.3 mn t. China's volumes are increasing but still not at the rate the market expected at the beginning of the year because mills there are very selective and buy only high-quality scrap. The disparity in prices is also a dissuading factor along with the production cuts. Therefore, China's scrap purchase will increase but SteelMint does not expect significantly high volumes in CY21, at best 0.8-0.9 mn t. It may be mentioned that China's consumption of ferrous scrap rose by 5% in CY'20.

Prices as on 9:00 IST, 20 Aug. d-o-d changes indicated against closing price of 19 Aug.