Through any given set of economic conditions, scrap recyclers can find plenty to be concerned about. During most of 2015 and into 2016, the concerns of processors and traders of stainless steel have been compounded by several bad circumstances.
Producers of carbon steel are not without their woes brought on by overcapacity, but in the stainless market an additional factor has been the drying up of activity in the oil exploration and drilling sector, which has stifled demand.
Contributors to a late February 2016 edition of the Bureau of International Recycling (BIR) World Mirror focusing on stainless steel and specialty alloys were nearly unanimous in their assessments of the market in the first quarter of 2016.
“After a difficult 2015, we have transitioned into an equally challenging 2016, to say the least,” writes Mark Sellier, a Hong Kong-based trader for Australia’s OneSteel Recycling. “Companies are downsizing, particularly in the oil and gas segments, which does not bode well for demand for finished products or for generation of scrap,” Sellier adds in a report that was co-authored with Mahiar Patel of Cronimet Singapore.
In Europe, Sandro Guiliani of Italy’s Guiliani Metalli writes glumly, “If there has been any change, it has been only for the worse.” In addition to lower output at stainless mills, he cites “the shortage of scrap [that] is perhaps the source of greatest discomfort for our sector.”
In the United States, Barry Hunter of Hunter Alloys LLC, Boonton, New Jersey, finds hope in federal government efforts there to enforce duties on imported semifinished and finished stainless steel. “This will be a significant ruling for the U.S. producers and, if upheld, would increase domestic demand and production of stainless,” he writes.
In the meantime, Hunter writes in the World Mirror, “reduced material values and limited flows continue to plague the market.“
Lower material values and reduced scrap flows also characterize the rest of the nonferrous scrap market in the U.S. and elsewhere.
As of early February, scrap recyclers continue to cite restricted supply as a foremost challenge. In a problem that has carried over from 2015, declining scale prices for each of the high-volume nonferrous metals has taken its toll on supply, with the bad weather simply adding another form of discouragement.
“Weather has impacted some generation, and material has been harder to find to fill our January and February orders,” says Matt Kripke, president of U.S.-based brokerage firm Kripke Enterprises, Toledo, Ohio. “Segregated clips seem to be especially tough to find at the moment,” he adds.
Kripke says people still are holding onto material waiting for exchange prices to rebound. “I have spoken to a number of dealers that are piling up both copper and aluminium at these [price] levels,” he comments.