BIR Autumn 2024: Stainless scrap competes in crowded arena

Throughout this century, stainless steel scrap has seen its demand (and price) dimmed on the global stage by the presence of abundant nickel pig iron (NPI) produced in Southeast Asia.

Panelists at the autumn 2024 meeting of the Stainless Steel & Special Alloys Committee of the Brussels-based Bureau of International Recycling (BIR) said NPI continues to feed melt shops in Asia. Additionally, some rolling mills that might otherwise operate adjacent melt shops have instead been buying imported billet made in countries with metal production overcapacity.

At the meeting, held in Singapore in late October, Jayprakash Sahu of India-based business information firm BigMint cited his home nation as one example where billet imports had put a lid on stainless steel scrap demand.

Statistics cited by Sahu indicate India had produced 20 percent more finished and semi-finished stainless steel in the first several months of 2024. However, scrap demand or inputs not only did not match that figure but instead decreased by 3 percent in the same time frame, he said.

Sahu chalked up the discrepancy to stainless steel billet imports, and cited Sweden and Indonesia as the two largest suppliers of billet.

Because of NPI export restrictions enacted in Indonesia, billet from that nation is essentially replacing some of the NPI once exported, but now in a semi-finished form.

That Swedish mills have the capacity to export is tied to Europe’s sputtering economy, said panelists. Omar Al Sharif of United Arab Emirates-based Sharif Metals Group said stainless scrap demand in Europe this year had been “far worse than the most pessimistic forecasts.”

Al Sharif, who summarized several market reports prepared by committee members, said his own Middle East region had been one of the growth areas for stainless scrap demand this year, while he characterized Japanese demand as “steady.”

In the United States, said Al Sharif, the upcoming election was causing “uncertainty,” including in the form of fewer recent scrap purchases by mills there.

Although Europe’s metals sector faces challenges, Joost van Kleef of Netherlands-based Oryx Stainless said if the nations of the world adhere to decarbonization goals, demand for scrap is poised to grow significantly.

According to van Kleef, stainless steel made without any scrap produces 7.8 tons of emissions for each ton of metal produced. Using 70 percent scrap, however, reduces that carbon footprint to 3.6 tons and using 100 percent scrap shrinks it to 0.8 tons of emissions per ton of metal produced.

European mills have taken these figures to heart and have reached a recycled content ratio of 90 percent, said the scrap processor and trader. He added, “There should be a premium for scrap, not a discount.”

Vegas Yang of Taiwan-based stainless scrap processing firm HSKU Raw Material Ltd., gave an overview of that stainless scrap discount and spread against the LME nickel price and how it has moved this century.

He described the period from 2006 to mid-2008, preceding the financial crisis, as “golden years” for stainless scrap processors, as they would routinely sell to mills at a 95 percent (near par) discount rate.

The financial crisis, said Yang, knocked the discount down to the 65 percent range, in a trough pattern that was abetted by the ramping up of NPI production in Indonesia.

A ban on NPI exports in Indonesia in the 2010s put the discount rate on an upward trend until about 2018, when Indonesian policy changes and investments saw more material leaving that nation, suppressing the value of scrap globally. Then, in 2022 the LME price spike led to a 55 percent discount rate.

This year, said Yang, “The discount rate has improved; I believe it will steadily recover to from 75 percent to 80 percent.”

Ending on an optimistic note, Yang said policies like the European Union’s Carbon Border Adjustment Mechanism (CBAM) will help scrap “remain the main preferred raw material.” The policy, he predicted, could help stainless scrap retain a more recycler-friendly 80 percent or higher discount rate.

The 2024 BIR World Recycling Convention Round-Table Sessions event was held at the Raffles City Convention Center/Fairmont Hotel in Singapore Oct. 27-29.