Russia’s revised import duties, China’s return to the ferrous scrap market, and robust domestic markets in the European Union and the US are likely to keep ferrous scrap prices elevated throughout the first quarter, according to the latest Irepas short-term outlook.
Scrap continues to play a key role in steelmaking and its importance is likely to only grow in the future, Irepas indicated, as China, one of the largest steelmaking nations globally, looks to convert to scrap-based steel production soon. This will also impact ferrous scrap exports from the US West Coast and Japan to South Asia, as China is likely to import higher volumes owing to the high domestic scrap prices.
Steel production in Europe, as well as North and South America, is picking up as the world recovers from the COVID-19 pandemic after a vaccine to protect against it was introduced towards the end of 2020. According to Irepas production levels in this region are likely to rise further as industrial demand increases. In the meantime, Irepas noted, the spread between raw material and steel prices remains high and is likely to spur higher production.
Supply remains tight in the global long steel market and Irepas expects this trend to remain until the second quarter, especially in the wake of the uncertainty surrounding the impact of the COVID-19 vaccine on the recovery of global markets.
The association indicated that order books in the longs market remain strong and steelmakers plan to ramp up production as more people get vaccinated and the world looks to return to the normal course of business. On the buying side, the tight supply in the longs market has not left buyers with any other option except accepting the higher selling prices.