Quarterly Report – July 2021

Asia - and in particular, Taiwan, Japan and South Korea - have all experienced new waves of COVID infections during the past three months. Vaccination rates in Asia are still generally low owing to a shortage of available vaccines. Stainless steel scrap demand is also following the trend where Asia - with the exception of India - is lagging behind the EU and USA.

Nickel has been bouncing from a low of US$ 16,500 per tonne to US$ 18,700. Chrome has been steady while FeCr High Carbon is being quoted at US$ 0.95 to 1.05 per lb.

Taiwanese mills’ demand for stainless steel scrap finally picked up pace in June after six months of weakness. The sudden uptick was due to China’s abolition of the 13% export tax redemption for stainless coils and flat end products at the beginning of June. So mills in Taiwan turned on their furnaces again and melted scrap. However, as stainless mills have accumulated excess stocks of coils and flat end products from the start of the year, they are taking a back seat on pricing of scrap purchases. However, it will be interesting to see how the third quarter unfolds.

After a similarly weak second quarter for South Korea’s stainless mills, they entered full production mode from June and so their demand for stainless steel scrap has been strong since then and seems likely to continue that way in the third quarter.

Stainless scrap demand has been steady in China. However, local market pricing of 304 scrap remains below the international level, meaning NPI is still the preferred raw material option. There has been sizeable demand for ferro-nickel too.

In Japan, mills’ demand for stainless scrap was still not strong in the second quarter, partly owing to regulations to combat COVID infections. With the Olympic Games starting shortly in Tokyo, Japan’s stainless scrap demand is likely to be weaker than usual for the third quarter. 

The COVID situation in India has stabilized to a certain extent as vaccination rates are increasing. The pressure on hospitals and the healthcare system has been reduced and many people have gone back to work. Slowly and steadily, the markets are all reopening in India, and demand for scrap and ferro alloys has been on the rise. In fact, the last month or so has seen a great improvement in the situation; most mills have strong order books and are chasing scrap.

A key issue in Asia and across the globe concerns the sourcing of containers in which to ship material. Freight rates in Asia have increased by over 300% in the last six to nine months, thus killing trade. Low-value items such as chrome steel are taking a hit as trade flows have slowed greatly. For scrap processors, it is extremely difficult to source a large number of containers. Owing to the strong scrap demand and crazy-high freight rates, there has been a major slowdown in the long-distance material coming to Asia from the USA and Europe. This is adding to scrap shortages for Asian mills.

Overall, it appears that the third quarter will continue to see a strong upward trend which may even continue into the final quarter of the year.