Demand For Scrap Steel Is Outpacing Supply

Developing countries, India and China have highest demand for scrap steel.

The high demand for scrap steel in developing countries, along with demand in China and India that is outpacing domestically generated scrap, will cause significant growth in the scrap metal market, according to the World Scrap Congress 2006 and research by Industrial Info Resources.

This surge in demand is fueling the search for alternative sources of supply and the development of new technologies to exploit unproductive scrap.

Estimates show that even if all technologically recoverable scrap were to be recuperated, the domestic feedstock available in tons would still be too low to meet material demands, according to the research. 

At a meeting of the Ferrous Round Table of Bureau of International Recycling at the end of October, John Neu of Sims Hugo Neu, Richmond, Calif., noted that there was concern for the future of ferrous scrap when, two years ago, China was investing heavily in gigantic blast furnace-based steel production.

But with substantial new electric furnace capacity being added or proposed in Turkey and a number of other countries, it is evident that ‘scrap has not gone out of style.’ He expects that scrap prices will probably increase in December and certainly in January when consumers replenish for the winter ahead.

In Europe, crude steel production has increased 4 percent to 100.7 million tons in the first half of 2006, while scrap consumption is estimated to have risen 5 percent over the same period to 53 million tons and could reach 106 million tons for 2006, reported Anton van Genutchen of TSR GmbH & Company, Bottrop, Germany.

Ferrous scrap exports from the EU-25 region soared 124.1 percent in the first half of 2006. But when compared to the same period in 2005, EU shipments to India slumped 78 percent to 288,000 tons.

In Russia, a sharp increase in domestic scrap consumption followed the addition of significant arc furnace capacity, according to Denis Ilatovskiy of Moscow's Mair Joint Stock Co. Because of this, Russia's scrap exports will probably decrease to approximately 2 million tons. And a lessening supply of easily obtainable scrap is also causing domestic collection volumes to fall, said Ilatovskiy.

India’s director general of foreign trade in the country’s Ministry of Commerce and Industry said that the presence of munitions in scrap imports had led to explosions and loss of life and beginning in April 2007, imports of unshredded ferrous and non-ferrous scrap would only be permitted from registered overseas suppliers and channeled through 26 ports, that are better equipped for scrap handling.

He said that the new import registration plan is not intended to diminish the flow of scrap into India or to deter legitimate exporters.

The reduction of copper levels in scrap to below the specification threshold of 0.25 percent by using various techniques is being addressed by Arcelor–Mittal. Anthony Bird of Bird Group in the UK said that double shredding could achieve copper reduction. He commented that the scrap shredder industry is quite anxious to develop post-shredder technologies as a method to maximize earnings from residues or reducing volumes required to be landfilled.

In the Netherlands, ARN is constructing a plant using the VW-SiCon process to derive secondary raw materials and fuel from residues. Although the technology is the best available at present, no guaranteed market exists for any of the products, said Bird.