In 2012, world crude steel production reached a record-breaking 1.6 billion tonnes, up 1.2% on 2011, according to the World Steel Association. Growth came from Asia and North America, but a decline in production occurred in the EU27 and South America.
China’s crude steel production reached 716.5 million tonnes last year, a 3.1% increase on 2011. Its share of world crude steel output increased from 45.4% in 2011 to 46.3% last year.
Other positives included increases in crude steel production in the US (+2.7% to 88.7 million tonnes), Russia (+2.3% to 70.4 million tonnes) and Turkey (+5.2% to 35.9 million tonnes). Conversely, there were reductions in crude steel output in the EU27 (-4.9% to 168.9 million tonnes) and Japan (-0.3% to 107.2 million tonnes).
China is attracting particular attention regarding scrap usage. Its steel industry cut consumption last year by 12.3%, despite the fact that crude steel production was 3.7% up on 2011.
For some months last year, iron ore was cheaper and so the cost of blast furnace iron was lower than that of steel scrap for many Chinese steel companies. This analysis is supported by the fact that global pig iron production increased by 6.8% to 1.1 billion tonnes in 2012.
There was a decline in steel scrap usage within the EU27 last year (-6% to 94.1 million tonnes), although the drop in the region’s crude steel production was lower at -4.9%. The biggest steel scrap user in the EU27 was Italy on 20.8 million tonnes (-5.8%).
Also on the decline during 2012 was steel scrap use in Russia (-4.4%), even though the country’s crude steel production increased around 2.3%. Scrap usage in Japan fell 4.6%, whereas crude steel output declined a mere 0.3%.
The major positives last year concerned steel scrap use in the US and Turkey.
The increase in US steel scrap use (+9.4%) was far greater than the growth in domestic crude steel production (+2.7%). The upturn in Turkish steel scrap consumption was around 5.1%, but the increase in crude steel production was slightly higher at +5.2%.
Exports from the EU27 jumped 2.1% to 19.2 million tonnes in 2012, with Turkey maintaining its position as the biggest buyer from this region on 11.1 million tonnes (+10.9%). Turkey was the biggest buyer of steel scrap for all the EU27 exporting countries last year.
But there was a sharp decline in shipments to China (-37.2% to 0.5 million tonnes). The EU27’s internal steel scrap exports last year were 29.4 million tonnes (-6.8%).
Rolf Willeke, statistics adviser, Bureau of International Recycling’s ferrous division
The European perspective
At the end of March, prices increased and, with volatility in the exchange rate, a number of European deals were done, particularly in the UK.
For April, there was anticipation of softening ferrous prices across the EU. But, in reality, there were no change as arisings remained in short supply and demand was relatively healthy across the markets. Container prices continued to be relatively strong, mainly on the back of favourable exchange rates.
At present, demand for material remains healthy. Spain is actively buying and, while prices have fallen recently, market sentiment is not too pessimistic.
Recent sales into Turkey from the US have been low, but there is still much ferrous meterial that needs to be bought for May. We will see where the numbers settle in the next few weeks.
With underlying demand remaining positive, the market is likely to move within a tight band. The downside is falling billet and rebar prices. But with the approach of the spring construction season, there is hope that this will be short-lived and the market will pick up. Ever-volatile exchange rates will continue to play a significant role in EU markets.
Tom Bird, president, European Ferrous Recovery & Recycling Federation
These reports are taken from the latest BIR ferrous bulletin