Mogens Bach Christensen, the chief executive officer of HJ Hansen, spoke to Davis Index about the importance of scrap trading in the bulk and containers market and shared his outlook on ferrous scrap sales to Turkey and China.
What is the current situation of the recycling industry in Scandinavia?
The Scandinavian recycling industry remains robust. The relatively high prices for ferrous and non-ferrous scrap are pulling a lot of material through the value chain. For example, winter is usually a time when we see lower volumes in the market but that has not been the case this year.
Can you share some details about HJ Hansen’s current capacity and the results of its operation for 2020?
HJ Hansen collects a total of more than 700,000mt of ferrous and non-ferrous scrap per year across 14 yards in Denmark and Sweden. We run three shredders, all located in Denmark. The group employs about 175 persons in Denmark, Sweden, Turkey, and China.
Our fiscal year runs from October to September and for the year 2019-2020 our revenue tallied at about $220mn while our operating result (EBIT) was at about $6mn.
How will the acquisition of Uniscrap strengthen HJ Hansen’s market position?
First and foremost, the acquisition of Uniscrap will give us access to a port with a deeper draft. This will make it possible to load more material on the ships.
What is your outlook on ferrous scrap export to Turkey in 2021?
Turkey is the most important outlet for our ferrous scrap, and we expect demand from this destination to remain strong. We have been seeing immense price volatility since November but hope they will stabilize soon.
Will China also emerge as a key destination for ferrous scrap this year?
We have been doing non-ferrous business in China for many years and it is a very interesting market for us. We are following the development of demand for ferrous scrap from China closely and believe this demand will increase. We are already shipping ferrous scrap in containers to Asia and are ready to do the same to China if the price is right.
How important is scrap trading in containers for Baltic recyclers?
Scrap trading is a good supplement to our deep-sea business, and we believe it is important to be in both markets.
What is your short- to medium-term ferrous scrap price forecast?
We will see a rebound in prices, but I do not see the market reaching the $485/mt level in the short term. Overall, we are in an uptrend price wise but it is difficult to predict the length of this cycle.