Global recycled steel usage rises 5% y-o-y in H1CY'24 - BIR report

In H1 2024, global recycled steel consumption increased by 4.6% to 255.183 mnt, despite a 0.2% decline in crude steel production, totaling 804.77 mnt. China's recycled steel usage rose by 5.4% to 122.54 mnt, while the EU-27 and India grew by 8.8% to 43.609 mnt and 14% to 17.8 mnt, respectively. The USA and Japan experienced declines of 1.8% and 0.9%, totaling 27.6 mnt and 16.031 mnt.

For the first time, the report included statistics on the consumption of recycled steel in both Basic Oxygen Furnace (BOF) and Electric Arc Furnace (EAF) steel production. Turkiye led with 94.2% EAF production involving recycled steel, followed by India at 80.4% and Japan at 73.1%. Despite China's high BOF production share (88.6%), its overall high crude steel output makes it the largest consumer of recycled steel globally.

Turkiye's overseas recycled steel purchases up 3.6%

In H1 2024, Turkiye's recycled steel imports rose 3.6% y-o-y to 9.985 mnt, reinforcing its position as the largest global importer. Key suppliers included the USA (up 6.6% to 2.122 mnt), the Netherlands (up 20.5% to 1.31 mnt), and the UK (up 50.9% to 1.11 mnt). In contrast, India saw a significant 26.1% decline to 3.88 mnt, primarily due to reduced imports from the USA and UK. Other regions also reported decreases, while Pakistan's imports increased by 16.1% to 1.103 mnt.

Export market update in H1CY24

In H1 2024, the EU-27 led global recycled steel exports despite an 18.7% decline to 7.36 mnt. Key destinations included Turkiye (down 17.6% to 4.65 mnt), Egypt (down 7.5% to 0.594 mnt), and India (down 38.6% to 0.45 mnt). The US followed as the second-largest exporter, with shipments falling 16.4% to 7.18 mnt, primarily to Turkiye (up 4.9% to 2.14 mnt) and Mexico (down 46.2% to 1.15 mnt). Other nations also reported declines, while Australia, Hong Kong, Mexico, and Singapore saw increases in exports.

Germany

As per Denis Reuter, Board Member of the BIR Ferrous Division, The German recycled steel market showed stability in early Q3 2024 but faced a price drop in September, leading to decreased volumes for both old and new recycled steel.

• The economy is in a technical recession, affecting investment and private consumption.
  
  
• The automotive sector is under pressure, with Volkswagen considering plant closures.
  
  
• August crude steel output was nearly unchanged at 2.9 mnt, with a 4% y-o-y increase for the first eight months to 25.4 mnt.
  
  

Challenges like overcapacity and high energy costs persist in the steel industry.

Scandinavia

The Scandinavian steel market faces challenges amid inflation control and geopolitical tensions.

Mogens Bach Christensen, H.J. Hansen Genvindingsindustri A/S, highlighted that European inflation is now under control at around 2%, prompting a reduction in interest rates from 3.75% to 3.50% by the European Central Bank. However, the recycled steel market is currently challenged by geopolitical tensions that are impacting the competitiveness of Turkish steel mills. While recent port strikes in the US have temporarily increased Turkish prices, a resolution is expected soon. European mills face declining sales and stiff competition, particularly from China, resulting in reduced production capacity. Furthermore, high freight costs continue to hinder competitiveness in India, Pakistan, and Bangladesh, despite stabilizing shipping rates.

United Kingdom

Tom Bird, Board Member of the BIR Ferrous Division at Enicor, noted that in the UK ferrous market, tight supply poses significant challenges, intensified by competition across various grades. The price for HMS in Turkish markets has decreased to just below $360/t, while domestic prices are softening due to lower material arisings. Container levels for ferrous materials are down, impacting margins. Similar issues are seen in Spain, where weakened demand has led to mill closures. However, the transition to Electric Arc Furnaces (EAFs) at TATA's Port Talbot may drive demand for ferrous raw materials, indicating potential market improvements ahead.

United States

George Adams from SA Recycling indicated that the US recycled steel market has experienced a stagnant period from July through September. Dealers faced challenges in securing upward price movements, often fighting for sideways pricing due to weak consumer demand. Initially, a price drop of $20 per tonne was anticipated for September, but the market remained stable, aided by limited recycled steel supply and increased mill capacity utilization.

The export market struggled as low-priced Chinese billets impacted pricing; however, recent Chinese stimulus measures could improve the attractiveness of US recycled steel abroad. Although consumer demand remains sluggish, decreasing collections and the rise of Electric Arc Furnaces (EAFs) may support modest price increases toward year-end.

As October begins, tighter supply could prompt mills to buy early to avoid shortages. With potential weak collections expected in November and December due to holidays, dealers may find opportunities for slight price hikes as the year closes.

Japan

According to Ted Taya Shinsei Scrap CO LTD (JPN), Domestic recycled steel prices in Japan have dropped approximately JPY 10,000/t from mid-July to the end of September due to weakened domestic demand and a stronger yen. The sluggish export market has exacerbated the situation, with negotiated export prices declining faster than domestic rates, leading to diminished inquiries from Gulf trading companies. In the Kanto tender on 11 September, a bid of JPY 42,720/t was accepted, marking a JPY 5,236 decrease from the previous month, the lowest price in 25 months. August exports also fell to 492,18 tonnes, down 13.7% month-on-month and 13.2% y-o-y, while domestic crude steel production decreased by 3.2%, marking six consecutive months of decline.

Middle East

As per Moosa Kazim Al-Qaryan Group (ARE), the Middle East is set to significantly reduce steelmaking carbon emissions, aiming for a 30% cut by 2030 through green hydrogen in direct reduced iron (DRI) processes. Sohar Port in Oman is leading green technology efforts, while Saudi Arabia's Vision 2030 promotes investments in sustainable industries. Steel production capacity in the Gulf is expected to reach 175 mnt by 2030, with steady demand for long steel products, especially in the UAE. However, the Saudi market is seeing a nearly 10% drop in HMS scrap prices.

Asia (including India)

Michael Gaylard from SIMS Ltd highlighted major shifts in Asia's seaborne recycled steel market for 2024, largely driven by a 21% m-o-m increase in China's steel exports in August, aiming for historic export levels. Cheaper Russian billet is disrupting Southeast Asia's procurement strategies, with South Korea's recycled steel imports plummeting 45% due to low construction demand. Taiwan saw an 11% decline in imports amid high energy costs. In contrast, Bangladesh's market remains stable. Meanwhile, India's hot rolled coil (HRC) prices dropped 13% since May due to rising imports from China.

Short-term Outlook:

The short-term ferrous scrap market is showing positive momentum, driven by rising finished steel prices in China and a strengthening Turkish market. UK-origin HMS has surpassed $370/t, reflecting a $10-15/t increase, while container prices are also rising, potentially influencing domestic trends. However, macroeconomic factors and global uncertainties remain risks.

In the US, October's recycled steel trade is slow, with limited demand and mill orders. Supply constraints may lead to price increases, especially with upcoming holidays affecting collection schedules, which could tighten supplies in Q4 2024 and lead to higher prices as winter approaches.