Dive Brief:
- Experts attending the 2016 ISRI Annual Convention last week say ferrous scrap has been on the rise this year, gaining $50 in value (possibly due to tariffs on imports), though they are not convinced that the rebound will stick. Attendees also discussed global trends, from material quality to the impact of iron ore’s ongoing price drop on scrap metal.
- Namik Ekenci of the Turkish Steel Exporters Association said as iron ore's value dropped in 2015, steelmakers in Turkey—the top exporter of US ferrous scrap—bought cheaper billet rather than melt their own metal. The quality of US scrap "is the best in the world," said Ekenci, as reported in Recycling Today, though he said it now contains more nonmetallic impurities.
- Panelists also discussed how automobile recycling will likely surge to near 95% and appliances recycling will be about 88% this year, with both figures mirroring 2014 activity, according to Dave Keeling of Pittsburgh-based Steel Recycling Institute.
Dive Insight:
"2015 was a wake-up call kind of year ... A [rapid] $100 per ton drop can cause a real sea change," said Spencer Johnson of INTLC FC Stone at the convention, speaking of the ferrous scrap market in the US. Indeed, the "sea change" was reflected as recently as this past January when ferrous scrap exports were down 47% over January 2015.
The radical shift is why Johnson recommended consideration of new hedging opportunities.
"Risk management is an underappreciated aspect of the ferrous scrap business," he said, as reported in Recycling Today.
The cost-cutting trend of buying billets will likely persist if scrap prices stay high, said Ekenci. Electric arc furnace (EAF) mills especially are importing billets and slabs from cheaper iron ore in China, Russia, and the Ukraine.
Another future projection he said, is while 2016 "has started better than 2015," it likely "is not going to be a boom year."