Speaking at the SteelOrbis 2016 Fall Conference & 75th IREPAS Meeting being held in Vienna on September 25-27, Jens Björkman from Stena Metal International, the chairman of the raw material suppliers committee, said that iron ore pricing has been more stable lately. He added that the slowing growth in China is increasing pressure on capacity utilization and is also weighing on prices. According to the raw material suppliers committee, scrap market conditions are fairly stable and the committee expects demand to return within a few months.
Regarding the scrap market, the raw material suppliers committee’s findings indicate a relatively stable market. Mr. Björkman said that scrap inflow in the Western world, namely, in the EU and the US, is down by around 20 percent this year compared to 2015, thereby affecting the profitability of recyclers. He also stated that the high value of the US dollar is putting pressure on dollar-based scrap pricing, while US domestic demand has dropped and this is the main factor causing the decline in scrap prices.
Commenting on the international trade, the raw material suppliers committee chairman said that Brexit resulted in the weakening of the pound, which opened the way for more exports coming from the UK. On the other hand, Turkish scrap trade has lately become more based on prompt shipments, while Russian scrap exports have declined sharply since domestic demand in Russia has improved. He also stated that the financing of the scrap trade is better in Russia, while, in the case of Turkey, banks were hesitant in the immediate aftermath of the coup attempt in July this year. He also commented that the recent rating downgrades for Turkey might impact financing as well.
In answer to a question on Ukraine’s scrap export tax, Mr. Björkman said that exports from the country have diminished and the supply from the Baltic region has compensated for the loss of supply in some regions, adding that Turkey might need to book larger deep sea cargoes and this would mean a riskier operation for the Turkish steel industry.