A Report on Steelmakers by MEPS and Scrap Metal News Updates

January 11, 2016

This weeks post provides our readers updated scrap metal prices on ships as well as updated news on recycling prices plus a report from MEPS – ARE PRIVATELY OWNED STEELMAKERS HEADING FOR OBLIVION?


Yieh reports on several stories – On the end of January 4, 2016, US’s H1 steel scrap metal prices are at US$150.17/long tons, the same as the previous week, the scrap metal prices remained unchanged for three consecutive weeks.

From December 27 to January 2, US’s crude steel production was 1.44 million/short tons, down by 1.1% compared to previous week. The mill capacity utilization was 60.2%, down from 60.9% the week before.

Yieh also reports that East Asia’s scrap steel prices expected to rebound from bottom level. Those for United States domestic and export scrap market have continued to improve so far.

Market participants are expected that if to buy Russia’s A3 scrap steel prices are likely to increase in near future, due to improving the market demand recently.

Scrap Ship Demolition Prices

GMS Weekly reports that the Indian market suffered some alarming falls in local steel prices with about USD 32/LDT lost since the start of the year alone. Bangladesh has likewise suffered falls of about USD 26/LDT since mid-December, despite some small improvements towards the end of the week.

For week 02 of 2015, GMS demo rankings for the week are as below:


Demo Ranking Country Market Sentiment GEN CARGO




1 Bangladesh Weak USD 270/lt ldt USD 300/lt ldt
2 Pakistan Weak USD 265/lt ldt USD 295/lt ldt
3 India Weak USD 260/lt ldt USD 290/lt ldt
4 Turkey Weak USD 155/lt ldt USD 160/lt ldt
5 China Weak USD 125/lt ldt USD 145/lt ldt


As reported by MEPS (International) Ltd. – The Chinese steel industry’s attempt to export its way out of the problem of domestic oversupply in 2015 has failed. The solution to the industry’s problems was, and still is, to make substantial cuts in local steelmaking capacity to bring output and demand into balance.

Despite annual exports of finished steel products from China rising from 62 million tonnes in 2013 to an estimated 115 million tonnes in 2015, the local mills have suffered domestic selling price reductions of close to 50 percent over the time span.

Granted, the cost of raw materials has declined during the period. However, the main driver for the price reductions in China and globally has been the substantial oversupply situation which was created, in part, by the rise in the level of low-cost exports from Chinese and Russian steel producers.

The vast majority, if not all, of the manufacturers of carbon steel grades in China are in a lossmaking situation because the decrease in raw material costs is much smaller than the reduction in steel selling values. With a large majority of the Chinese steel enterprises being state-owned, such a situation can only be sustained through local and national government subsidies.

Any plan that the Chinese may have had to improve the performance of the local steel industry has, to date, met with only limited success. Typically, over the last twenty-four months, domestic prices for hot rolled coil in most other parts of the world have fallen by around 40 percent but halved in China.

However, in the current situation, one in which virtually the whole of the global steel industry is now making losses, we have noted little substantive reaction by the governments of the countries most affected by the import growth. The imposition of import duties has been limited so far – mainly due to bureaucratic difficulties associated with the current trade regulations.

Low-priced exports of steel from China and Russia have proved to be successful in restricting competition in the global market. The recent closure of several, privately owned plants in the western world highlights this point. Several other factories are being shuttered. Many more are cutting output and their workforces.

Are countries with state-owned steel industries to be allowed to dominate the sector through subsidised manufacturing? Are western governments sleepwalking into a world in which the majority of carbon steel products will be only available from countries which are prepared to subsidise their state-owned steel mills?

A vibrant steel industry is a prerequisite of most economies. Development of new and sophisticated steel grades is essential for the improvement of a wide range of industrial products required for modern living. If the steel sector in the western world is decimated through poor profitability, choices for the engineering companies will be limited and only available in remote locations.

Surely, this whole scenario is a betrayal of the millions of steel workers who have lost their jobs over the last thirty years in the name of free market conditions and the elimination of government subsidies.