Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

During the recent BIR Convention, attendees discussed China’s influence, EU export limitations on steel scrap, and scrap price expectations for the remainder of 2021.


For the remainder of 2021, steel prices are anticipated to fall in the coming months at a slightly greater percentage rate versus any decline in ferrous scrap prices. Tom Knippel of US-based SA Recycling noted the “decoupling” of new steel and scrap prices as the high historical prices of new steel were not sustainable long term either in the US or globally. Knippel noted that global ferrous scrap demand would support the prices on the raw material. 


Due to demand from China, billet prices skyrocketed above the gains of ferrous scrap through Q1 and Q2 2021. 


As China undertakes its 14th five-year plan environmental analysis, the country reduced its reliance on iron ore for steelmaking and increasing its consumption of scrap and steel billets in newer electric arc furnaces. The shift could result in 10mn mt of scrap imports annually as China’s crude steel production peaks in 2022.


Japan and South Korea have emerged as leading suppliers to China on geographical proximity and can facilitate P&S and shredded scrap grades as most aligned to the country’s strict import specification requirements. As demand from the country grows, the US and EU are expected to also become significant sources. 


Denis Reuter of German-based TSR Recycling noted that the USA and Europe were facing a lower generation of prime scrap driven by the chip issues affecting production in the automotive sector. The lower prime scrap availability has increased the use of shredded in steelmaking composition and scrap alternatives. 


Reuter expressed concerns over proposed changes to EU export shipment regulations that could limit exports of materials designated as “waste” only to those facilities which operated in broad accordance with the health and environmental standards established in EU law. While a full ban of EU metals exports is not anticipated, the situation could limit flows to emerging markets. Schnitzer highlighted that ferrous should not be considered waste, but a recycled raw material. Regardless, recent petitions from various MP’s throughout the EU are calling on limits to ferrous scrap exports to ensure raw materials for the domestic steel industry. 

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