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China steel dumping 'unsustainable'

China’s dumping of cheap steel on European markets is unsustainable, the Bureau of International Recycling (BIR) has heard.

Speaking at the BIR Convention in Prague, Tom Bird, managing director of Mettalis Recycling, pictured, said: “There needs to be a change in the approach by China [as] producing steel at the current rate and pricing it accordingly is simply not sustainable long term.

“It is early days, but with huge losses in the state-owned Chinese steel sector attracting the attention of Beijing, international pressure and countries now taking a more aggressive stance to Chinese steel products, this can only be of benefit moving forward.”

Such imports have been blamed on the rash of plant closures and thousands of job losses in the UK steel industry, notably at the Tata and SSI plants in the north-east.

Bird said steel producers across Europe were struggling to compete against Chinese exports, thus adversely affecting demand and prices for steel scrap.

“It has been reported that some of the Spanish mills are considering a temporary cessation of production,” Bird said. “The depressed market is in turn affecting arisings of material, with many operators across the EU reporting volumes into yards as much as 30-40% down on normal levels.”

Bird said intakes were also slowing in the US as winter approaches, and “some mills may start to become uneasy about the ongoing availability of scrap”.

By contrast, Indian and Pakistani markets had been “very active” in recent weeks, thus boosting scrap exporters, Bird noted.

Current market conditions had encouraged some scrap consumers – “many who have been away for months” – to enquire about availability and price “as they recognise the viability of making finished steel from scrap at the lower levels”.

The convention also heard from BIR Ferrous Division president William Schmiedel that steel billet exports from China “at ever-decreasing prices” had been “truly the cause of the present condition of ferrous scrap values”.

Schmiedel, president of Sims Group Global Trade Corporation, said: “The lower prices we are experiencing today should enable our customer base to again start to look at ferrous scrap as a reasonable, viable and economic option.”

He noted that the chairman of a major Chinese steel producer had admitted the country’s steel industry had lost $2.8bn for the first eight months of 2015.

Becky E Hites, founder of US-based Steel Insights, noted that US scrap exports were 40% below their 2011 peak and down 17% year-on-year in January-August despite an increase in shipments to five of its top 10 outlets: Turkey, Mexico, India, Vietnam and Peru.

She argued that, within the Chinese government, “the tide has turned against the accommodating policies for the steel industry”.

The convention was told the latest figures from BIR statistics adviser Rolf Willeke showed the 28 EU member states remained the world’s leading steel scrap exporters in the first half of 2015, despite a 12.1% reduction against the same period in 2014.

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