BIR Report

During the recent Bureau of International Recycling (BIR) Autumn Round Tables in Dusseldorf, Germany, a panel of traders discussed the challenging environment for stainless steel scrap, with nickel, a key material in stainless steel, showing wild swings.

Markets are soft at best in most regions of the world, with many stainless steel producers adjusting their expectations downward during the second half of 2008.

In his opening presentation, Michael Wright of ELG, Sheffield, England, noted that in general Europe had seen significant production cuts in stainless steel. While European stainless steel production for 2008 was earlier forecasted to top the 8.1 million metric tons produced in 2007, more current data indicates production may decline by nearly 5.5 percent to 7.6 million metric tons this year.

Wright also added that next year’s stainless production figures could show a further 10 percent decline to less than 7 million metric tons.

The slump is not limited to any particular country, with reports from Germany, Russia, the Scandinavian countries, Belgium and Italy all forecasting sharp declines. In Belgium, one representative said that Arcelor Mittal has reduced its purchases by 30 percent and was indicating it was not interested in building up inventory.

Ildar Neverov, with the Russian firm Siberia Metals Ltd., echoed the less than bullish figures, and other consumers throughout Europe reported the same conditions.

Barry Hunter, president of Hunter Alloys LLC, a U.S.-based stainless steel trader, noted that with the market reflecting a significant discount compared to historic competitive buying practices, physical room and financial needs had become the determining sales factors for suppliers. With the low prices being offered, most handlers were opting to hold on to material.

Ahmad Sharif, senior director of Sharif Metals in the Middle East, said, "Nickel prices went down to a world record low of 50 percent in less than a month’s time." The sharp decline has led many scrap recyclers in the region to downsize, while others have closed.

China, a primary driver for many metals, had pulled out of the market. One speaker said, "The country has not made any significant buys during the third quarter."

Optimistic reports pointed to a possible stabilizing of the stainless steel market by the second quarter of 2009. In the meantime, stainless steel dealers should expect a more challenging environment.