Prices in the global ferrous scrap arena will continue to be volatile in 2017, the Bureau of International Recycling (BIR) has predicted.
Certainly, 2016 was a year of heightened volatility and increased risk, William Schmiedel, president of BIRs ferrous division, said in quarterly report issued in February by the association. As we look forward into 2017, the global landscape appears to be equally volatile, he added.
BIR expects government policy to have a greater effect on global scrap prices than more traditional pricing dynamics. This is not just true in China, but in most major steel-producing regions, Schmiedel said.
The Chinese governments restriction of coking coal production in that country led to a sharp rise in premium hard coking coal prices, which almost tripled between August and December of last year.
Higher raw materials costs resulting from the spike in coking coal prices set off ripple effects in the global markets.
It is certainly true that the final quarter of 2016 yielded much higher hot-metal costs for integrated steelmakers worldwide than existed through the first three quarters of last year, Schmiedel said. This could explain why total Chinese exports were 3 percent lower year on year, he noted.
George Adams, BIR ferrous division ad hoc board member representative, credited good weather and high scrap flows with helping maintain U.S. scrap prices this past winter, but noted that weakness in Turkey had caused a discrepancy between local and international scrap prices. Although Adams expected a reset to address this discrepancy, his overall outlook for U.S. scrap markets was not downbeat.
Tom Bird, BIR board member and Liberty House official, was no less optimistic on the road ahead for scrap prices in Europe. Januarys drop in scrap prices caught the market by surprise, given that demand for steel scrap remains buoyant, he said. Many operators feel there has been something of an overreaction; demand is relatively healthy and China seems to be playing ball, Bird noted. Once any overhang of material has disappeared, therefore, we should see stability.