Problems of Russian scrap export

- You’ve got a lot of this scarp! – American said like that, one of top-managers of the largest metallurgical holding in the world, about the situation with scrap in Russia. However, export is only decreasing.

/Gelasimov Viktor/ Export of scrap of ferrous metals from Russia in 2006 (considering deliveries to Bellurussia) exceeded 12 mln. tons, which is significantly less than the level of two previous years. In 2007 after conducting of final results, we will see, most likely,  20-30% decrease relative to  2006.
The largest consumer of Russian scrap is Turkey. In 2006, from Russia to this country, about 4 mln. tons of steel scrap were exported, which makes up one third of total export. Abrupt export decrease in 2007 had little to do with Turkey. Spain is the second large exporter of Russian scrap, the share in total export volume in 2006 made up almost 11 %.
Growth of volumes of scrap of ferrous metals consumption at the domestic market of Russia continues to remain the main driving force, which initiates changes of foreign trade business, direction of deliveries and prices. Stable rate of demand increase is here, but scrap production practically does not grow. Naturally, under these conditions, internal consumers try to create more attractive price situation inside the country, which allows to increase scrap shipment to the domestic market, while there is reduction of its deliveries for export.
As a result, export has been shortening already for the second year. And though, in comparison with last year, rates of its growth slowed down, trend remains stable. Because domestic consumers don't have a place where to take scrap from. That is why export remains practically the only reserve for keeping demand volumes at the necessary level. And if earlier, export prices often became a decisive factor, which determined price situation, now there is mainly competition between internal consumers, and export receives «what is left».
In such a way, current state of scrap procurement sector make market participants direct more and more resource volumes to internal consumers. At that, there is practically no reserve for volume increase of scrap pick up (with the exception of increase of depth of scrap pick up, which is costly and of limited occurrence), and internal consumption, vice verse, has extremely high potential of development (considering launch of new steel-smelting facilities),in the near future, further reduction of export looks inevitable. Traditional buyers, such as Turkey, will be forced to increase their purchasing prices even further, that is why there is a probability, that during crisis months, the level of 500 dollars will be reached not once.
 According to the opinion of participants of annual survey, conducted by the company  Rusmet.ru, internal market is more significant strategic area for scrap procurers. Volumes of scrap deliveries for export will be very insufficient in comparison with volumes of domestic market and this trend will only strengthen within following years. Though, considering transport ways, the level of annual export of  1-2 mln. t will be, most likely, stable.
 The main consumers of Russian scrap are China and Turkey, however, according to the participants of the survey, along with decrease of deliveries of Russian scrap to Asian region, in 2007, Turkey will have a leading position, as a consumer of Russian scrap.
How today is the market of Russian scrap developing? Where are the main export flows of scrap directed in 2008? How will the price for scrap change in 2008? Is it possible now to get long-term price outlook? Where is it better to look for new consumers of Russian scrap? Is it necessary to look for them?
The largest forum in Eurasia  “Scrap of ferrous and non-ferrous metals”, will be dedicated to this issue and many others, and this forum will be held on 27-28 of February in Moscow. More than 400 participants are expected to be at the forum.
We invite to take part in survey Rusmet on the market of scrap of ferrous metals: http://old.rusmet.ru/poll.php?poll_id=85

Monday, February 18, 2008
Scrap
Source: Rusmet.ru