Ferrous

Ferrous Fortunes Improving?

Optimism regarding prices is re-emerging in ferrous scrap markets, according to speakers at the ISRI Ferrous Roundtable, held Sept. 12 in Chicago.

The resurgence of Asian economies and the possible reduction of scrap shipments from Russia and the Ukraine are changing the supply and demand factors in the ferrous scrap equation, according to Justin Klug of Sims Metal America, Richmond, Calif.

“Asian economies are gradually returning to pre-crisis levels,” said Klug, noting that low inflation rates and sustained low interest rates have revived the economies of nations such as South Korea, Malaysia and, more slowly, Japan.

While Japan was the leading exporter of ferrous scrap to South Korea in 1999, the U.S. looks ready to regain its title as the leading exporter to that nation in 2000. Scrap generated in Japan is now “staying home,” Klug remarked, thanks in part to an improving economy and a large new basic oxygen furnace started up by Nippon Steel.

Another global factor that may help ferrous prices in the U.S. is that Asian steelmakers are failing to see shipments promised from Russia delivered to their mills. A combination of factors including crowded Baltic ports, traders who held onto shipments after prices shifted and the “double sale” of some shipments to more than one consumer could result in a scramble for some Asian mills to keep their furnaces fed.

Regarding the promised Russian shipments, Klug noted that “winter is coming and time is running out” before the inland waterways and ports of Russia freeze up, putting a halt to most Russian shipments.

Bjorn Voigt of Germany’s Thyssen Sonnenberg Recycling, Dusseldorf, has projected this year’s exports of scrap from the Ukraine to drop, but for Russian exports to match last year’s levels. He also noted, though, that those projections could be inaccurate due to “a lack of delivery” of shipments beginning in August.

“We like their scrap and need their scrap; it’s a good grade,” Voigt said on behalf of Western European steelmakers regarding Russian scrap. He expressed concern that scrap staying in the former Soviet Union could spur steelmakers there to pump out even more low-priced steel that could be headed for Western European and North American markets.

The presence of imported steel also figures into concerns for near-term scrap prices. A scrap dealer in the Southeast believes wide margins enjoyed temporarily by domestic steelmakers are about to come to an end. While tariffs have lowered the amount of Russian and Japanese steel entering the U.S., other foreign steelmakers may be ready to step in.

On the scrap generation side, the dealer notes that some of his industrial generators have slowed production and anticipate less crowded order books in the third and fourth quarters of this year. Two plants in his region have closed, one moving to Mexico and the other consolidating its operations with a facility in another city.

INLAND CONSIDERING NEW EAF

Management at Ispat Inland Steel, East Chicago, Ind., is considering building a new high-capacity electric arc furnace (EAF) to replace two aging blast furnaces at its East Chicago, Ind., complex.

Speaking at the Institute of Scrap Recycling Industries Inc. (ISRI) Ferrous Roundtable in Chicago on Tuesday, Sept. 12, Ispat Inland’s Kevin Crary said that the company has not reached a final decision on the project, but has conducted preliminary studies.

Crary outlined for Roundtable attendees the mix of metallics that would be required to feed the proposed new EAF, and it is a mix that would shift greatly from what feeds the existing blast furnaces.

The existing blast furnaces use primarily “hot metal” derived from iron and coke while melting 250,000 tons of internal scrap annually and 250,000 tons of purchased scrap. The new EAF would melt 200,000 tons of internal scrap and between 600,000 and 1.3 million tons of purchased scrap annually, as well as from 1.1 million to 1.8 million tons of direct reduced iron (DRI).

According to Crary, an annual average scrap melt for the new furnace might consist of more than 700,000 tons of busheling, 180,000 tons of steel clips, 120,000 tons of ferrous shred, and lesser amounts of plate and structural, heavy melt, tin and pit scrap.

He noted, however, that the busheling would be a “swing grade” that would be somewhat interchangeable with DRI, depending on prices.