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Steel export prices will rise and rise

Prices for exported steel will continue to increase with markets in China and India flourishing for at least the next 20 years.

This was the view of Iron and Steel Statistics Bureau (ISSB) operations director Steve Mackrell while addressing the British Metals Recycling Association’s annual meeting.

He said: “The growth goes on and on. Clearly the centre of gravity in steel-making is moving towards China which is rapidly accelerating. The country is experiencing what happened in Japan during the 50’s and 60’s, but on a far greater scale. It is the new workshop of the world.”

This year has seen a massive rise in production, with China’s increasing by 26% and India’s by 15% between January and October.

Using Japan, Germany and the USA as examples of countries that have gone through phases of massive growth before reaching a plateau, Mackrell believes China is at the start of its second phase of evolution.

He said: “The growth will be anything between 20 and 30 years with increasing wealth meaning people moving from the country to city and urbanisation.”

India is at the beginning of the journey, slowly moving to the second phase, with the more mature economies easing off.

North American global production has dropped by 5.5% this year and the UK’s by 5.4%, with this trend set to continue as more scrap metal makes its way towards the two emerging economies.

Mackrell added: “Export prices can only increase. China is expected to need an extra 119 million tonnes by 2008 and along with India and Brazil, scrap for domestic use will also grow in Russia as open hearths are replaced.”

The ISSB predict that as China’s Electric Arc Furnace (EAF) production increases, so will their domestic scrap recovery, meaning that imports will eventually start to fall.

But with Indian EAF production expected to be 50% of total steel production by 2020 and China’s 2010 predicted crude steel capacity of well over 500 million tonnes said to be understated, a lucrative market for British traders will remain at least for the next two decades.

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