In September, the monthly dynamics of the main indicators of the scrap collection industry deteriorated sharply: the reduction of scrap collection amounted to 9.7% – to 372.7 thousand tons, the supply of scrap metal to metallurgical enterprises decreased by 3.2% – to 308.1 thousand tons. Warmed up by export opportunities, the market began to cool down sharply after August, when there were record rates since the beginning of the year for scrap collection (412.5 thousand tons) and deliveries to metallurgical plants (318.2 thousand tons).
For 3 quarters from the beginning of the year, the main indicators of the scrap collection industry have grown as follows:
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scrap collection – by 43.1%, to 3.13 million tons;
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supplies of scrap metal – by 22.7%, to 2.53 million tons.
At the same time, there was a further decline in the dynamics of exports of scrap metal. The decrease in external supplies in August amounted to 27% – to 76 thousand tons, and in September exports fell by another 40.7%, to 45 thousand tons.
The sharp slowdown in export dynamics is associated with the stabilization of world prices, which made external supplies of scrap less economically feasible. Over the past month, scrap metal quotes moved mostly horizontally.
According to the State Enterprise "Ukrpromvneshexpertiza", in September the price of the basic type of scrap grade HMS 1&2 (80:20) in Turkey dropped by only $5 – to $440/mt. Only at the beginning of the month the cost of raw materials fell by several dollars amid weak demand for rebar and wire rod. In addition, large factories, which largely determine the pricing policy in their countries, had sufficient stocks available, which allowed them to go out with purchases only when absolutely necessary. As a result, suppliers competed fiercely with each other, lowering prices. In the future, exporters flatly refused to go for a decrease in cost, arguing their position by a reduction in supply and the beginning of an increase in domestic scrap prices in certain regions of the United States.
The prospects for the development of the scrap collection industry are significantly deteriorating due to the beginning of a decrease in prices on the world steel market and the possible introduction of a ban on the export of scrap by the end of 2022, which is initiated by the Ministry of Economy. This option is no better than what the metallurgical lobby offers – the introduction of an export ban until the end of 2023. The ban on the export of scrap until the end of next year will quickly lead to a continued decline in scrap collection and deliveries to metallurgical enterprises, as well as to stagnation of the scrap collection industry.
