12 July 2023 – Global scrap availability is expected to deteriorate significantly in the near term after more and more Asian steelmakers announced plans to increase scrap quotas. And in the United States, prices are rising for HRC, CRC and HDG.
Global scrap supply to tight due to higher scrap demand for steelmaking
The global availability of steel and stainless steel scrap is expected to decrease drastically in the coming years. According to our assumption, more and more Asian countries are now announcing that they will significantly increase the share of ferrous waste in steel production.
After China had already announced to increase the scrap rate, now South Korea and and other large steel-producing countries in Asia intend to follow suit. This is the steelmakers’ response to global efforts to reduce carbon dioxide emissions. South Korea can currently only cover 80% of its ferrous waste demand in its own country and is particularly dependent on the import of high-grade scrap.
Massive demand grow for in the coming years
The dimensions of Asia’s growing demand for ferrous and non-ferrous waste are gigantic, as the example of China shows. Just increasing the rate by 5 percentage points means that the country will need more than 8.3 million tonnes of stainless steel scrap per year by the end of 2025. An increase of about 2 million tonnes.
Clear advantages of scrap in the EAF
The benefits are obvious. The higher the proportion of scrap in the EAF, the lower the energy input – resulting in lower costs and lower CO2 emissions.
US steel prices continue to rise
US hot rolled coil (HRC) prices rose for the second week in a row, as lower spot prices evaporated and trading activity remained light in the last week after the 4th July holiday. Cold rolled coil (CRC) and hot-dipped galvanized (HDG) prices also continued to move higher.
Imports may play an increasing role in the coming months, with US Department of Commerce Licensing data showing a potential 2.3% y/y increase in HRC imported volumes in June.
There is an unexpected temporary shutdown for maintenance at one of the US hot rolling mills. The reported possible downtime can be up to four weeks.
US crude steel production in the week ending 8 July is down on a w-o-w and y-o-y basis. According to AISI, US crude steel production fell 1.7% week-on-week and slightly by 0.6% year-on-year. On 8 July, adjusted U.S. crude steel production is down 2.8% y/y. As regards capacity utilisation, it stood at 75.8%, having fallen by 4.2% year-on-year. This should support the price uptrend further.
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Disclaimer: Many things here represent our opinion. Others are information from the Internet. We can therefore never claim to be correct or complete. And never base a business decision solely on the news you receive from us.