Ferrous

Ferrous scrap prices in February soared to heights seldom reached by the secondary commodity, spurred by fierce competition between Asian and North American buyers of scrap metal.

Consumers of the material began seeing some hope in late February that a peak had finally been reached, although a scarcity of generated material could still put a good deal of leverage in the hands of sellers.

As reported earlier, the scarcity (and price) of scrap has caused North American consumers to explore the notion of export restrictions to keep ferrous scrap off the international market.

The idea is not unique to North America. Already this year, South Korea and some of the former Soviet republics have enacted export bans as a way of coming to the assistance of their domestic steelmakers and foundry operators.

A March hearing before a House of Representatives committee, however, seemed to temper the notion in the U.S. (See "Testimony Addresses Scrap Import Ban" on page 10 of this issue.)

The market that processors and consumers are grappling with saw record amounts being paid for ferrous scrap in February and concerns by some processors that sufficient scrap to meet demand is becoming increasingly hard to find.

Some consumers who are also generators have reacted by attempting to make arrangements to keep some of their scrap in a closed corporate loop. The idea is not totally new, as Ford Motor Co., working with Alcan Aluminum Corp. and OmniSource Corp., initiated such a system for aluminum scrap back in the summer of 2002. (See "Full Circle," Feb. 2003 Recycling Today.)

According to a report in American Metal Market, Ford and DaimlerChrysler Corp. are offering far fewer scrap bundles to the open market. Industry observers believe the companies are bartering the bundles with steelmakers to secure better pricing for finished steel for their stamping plants.

For now, recyclers are scrambling to find suitable material to fill orders. One recycler claims that his operating region has been stripped clean of stockpiled auto hulks and other once-plentiful sources of obsolete scrap. "We’re at a point where 500 cars in one yard is a nice find," he remarks. "We just bought the last sizable stockpile I knew of that was in this entire region."(Additional ferrous market news is available online at www.RecyclingToday.com.)

Skyrocketing scrap prices have helped prompt Steel Dynamics Inc. (SDI), Fort Wayne, Ind., to move ahead with plans to build an alternative iron production facility. According to a report in the Fort Wayne (Indiana) Journal Gazette, SDI and a group of partners may invest up to $100 million in a Butler, Ind., plant that will produce pellet-sized iron nuggets that will serve as a scrap and pig iron substitute. 

SDI will reportedly join with iron ore firm Cleveland Cliffs, Cleveland, and Kobe Steel of Japan, to build the Butler facility. The two companies have been developing and testing the substitute at a Silver Bay, Minn., pilot plant.

The venture will not be SDI’s first foray into alternative iron technologies. The company, which operates electric arc furnace mills in Butler and Columbia City, Ind., also makes a pig iron substitute at its Iron Dynamics operation in Butler. SDI managers hope the new pellets will be less expensive to produce than what they are paying for the Iron Dynamics material.

 According to the Journal Gazette report, Steel Dynamics will have an estimated 50 percent ownership stake in the proposed Indiana plant and a roughly 20 percent stake in an expanded version of the Minnesota operation.

The new technology sends iron fines and coal into a rotary hearth gas furnace where an oxygen reaction creates the iron nuggets.

SDI CEO Keith Busse has told the Journal Gazette that the nuggets would be about half as expensive as the March 2004 cost of pig iron ingots, which was approximately $350 per ton.

The European Commission has adopted new provisions laying down minimum levels for the recycling and recovery of the components and materials in new vehicles scrapped in the European Union.

According to Commission, the provisions will apply to all new vehicles placed on the market in the European Union (EU) three years after the adoption of this new directive.

The motor industry in the EU represents 34 percent of world output of motor vehicles. According to the member of the Commission with responsibility for enterprise policy Erkki Liikanen, this "is an important step in the recycling of the parts and materials used in the construction of motor vehicles. I am particularly pleased with this measure, which should allow us, with the help of the motor industry, to achieve the ambitious objectives set for 2015 and do a little more to protect the environment. It is in fact essential for the manufacturers to incorporate recycling right from the development stage in producing new vehicles, and the industry will thereby demonstrate its commitment to producing safer, more environment-friendly vehicles, even if this results in increased production costs. Finally, this will improve the operation of the single market, since these measures will come into force at the same time for all new vehicles put on the road in the European Union."

The directive sets targets for the reuse, recycling and recovery of the parts and materials in end-of-life vehicles. In future, only a very small portion of these materials must find its way to landfills. On the contrary, most of the parts and materials must be reused, recycled or recovered. The minimum percentages to be reached from 2006 onwards are 80 percent for reuse and recycling and 85 percent for reuse and recovery.

These minimum levels are intended to be raised in 2015, when they will be set at 85 percent and 95 percent, respectively.

The targets will be re-examined by the European Parliament and the Council before they are put into effect.

The measures will apply to cars and vans, whether new models or models currently in production, which are placed onto the market three years after the new directive is adopted. This means that they should take effect from 2008 onwards. They will not apply, however, to vehicles with small production runs (less than 500 vehicles per year in each member state) in view of the considerable investment that these SMEs would be required to undertake in order to modify their production.

International Steel Group Inc. (ISG), Richfield, Ohio, has apparently made a successful bid for bankrupt Weirton Steel Corp. of Weirton, W. Va.

According to an AP report, Weirton’s board of directors has accepted a $225 million buyout offer from ISG, adding another integrated steel mill complex to ISG’s stable.

Formerly owned by its employees, Weirton Steel has been mired in a cycle of layoffs and bridge loans in recent years.

If the deal is completed, ISG will take possession of Weirton’s tin mill, considered to be one of the largest in the U.S. Under the arrangement, layoffs already announced by Weirton will remain in effect and another 300 layoffs will also be likely, according to the AP report.

ISG’s operating units will now include the mills operated by the former LTV Corp. of Cleveland, as well as those acquired from the former Bethlehem Steel and Acme Metals companies.

In a news release, Weirton Steel CEO D. Leonard Wise referred to the ISG purchase a good outcome for the company, its employees and the community of Weirton. "Our goal has been to secure the best possible solution for all of our stakeholders and to maintain a steel operation in Weirton," he remarked. "We believe ISG provides the answer."

Weirton will reportedly file complete details of ISG’s offer with its Bankruptcy Court judge, who will provide a month-long window to accept and consider other bids for Weirton’s assets.

ISG has also announced that it will re-start a blast furnace and a steel caster in Cleveland that have been idle since the summer of 2001. The company cites expected continued strong demand for steel as its reason to re-start the production facilities and re-hire some 140 Cleveland workers.

The furnace and caster are located near existing ISG production lines, and are part of the former LTV steelmaking complex in Cleveland.

According to a report in the Plain Dealer of Cleveland, ISG will invest some $10 million to restart the idled equipment, which will produce steel slabs. Production may start as soon as May, with the caster able to make some 60,000 tons of steel slabs each month.

The re-start will help ISG continue to boost its production, according to CEO Rodney Mott, who has predicted ISG will ship between 14 million and 15 million tons of finished steel this year, up from 10.4 million tons in 2003. ISG has also continued to raise the prices of its products, often taking the form of "raw materials surcharges."