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World battle for stainless steel scrap begins
World battle for stainless steel scrap begins

20 July 2022 – The global battle for steel and stainless steel scrap is heating up. Now the Chinese stainless steel producers have also clearly stated the enormous advantage of scrap and declared the raw material to be the second most important nickel supplier. This announcement could cause serious concerns for steel producers, e.g. in Europe and India, with regard to the availability of and price increases for stainless steel scrap. Globally, steelmakers’ shares are rising again. And nickel prices continue to rise.

World battle for stainless scrap begins

The Chinese steel industry has declared stainless steel scrap the second most important raw material supplier for nickel. And also positioned its economic value on the second place on the winner’s rostrum in stainless steel production.

Western stainless steel producers already positioned

The large Chinese stainless steel producers have thus joined the queue previously led by European and US companies. Western stainless steel producers have been focusing on the value and economic benefits of scrap for some time. Just take the proposal for the new EU Waste Shipment Regulation, which de facto prevents the export of scrap from the EU to non-OECD countries.

Most recently, a think tank close to the British government had suggested an export ban on scrap from the UK.

India largest net importer in Asia

Other countries that rely on scrap in stainless steel production, such as India and Taiwan, are also among the world’s largest importers of scrap. So far, especially from the United States, Europe and Japan. India, however, is by far the largest consumer of stainless steel scrap in Asia. The country imported more than one million tonnes in 2020 alone.

Officially under the banner of CO2 neutrality

The concept of CO2 neutrality is commonly cited as the most important factor in the use of steel and stainless steel scrap. Which may well be true, but it ignores another important point: Cost-effectiveness. Stainless steel scrap is, in the overall context, the cheapest raw material in production. It simply has to be melted down in the EAF and already contains all the important raw material components for the new stainless steel.

In the EU, scrap is even the guarantor that free ETS certificates can be called up more easily. It is also a competitive advantage for the Europeans, who can charge a higher price due to the base price plus alloy surcharge, but use almost exclusively stainless steel scrap in production.

China in transition

Chinese manufacturers have now also recognised this and named nickel as the second most important raw material. And under the government’s directive to put steel production in the Asian country on a completely new and more sustainable footing, this should soon lead to China being perceived as a global player in the stainless steel scrap market. And with India’s stated goal of increasing annual steel production from 100 to 300 million tonnes, this should offer huge upside potential in the price of scrap, especially for stainless steel scrap.

Shares of steel and stainless steel producers turn positive

In Asia, Europe and the United States, shares of many steel and stainless steel producers turned positive again yesterday after sharp falls, and some have risen again by more than 5% in morning trading today.

Nickel prices continue to rise

Nickel prices continue to rise today. On the Asian commodity exchange SHFE, nickel contracts had already risen by 5.6% in some cases. And in Europe, too, nickel on the LME continues to rise. Currently by about 2.8%. Already at the end of last week, it had become apparent that nickel contracts could rise significantly again.

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