Rusmet reported that steel scrap export volumes decrease by 72 % according to the results of 2009 conditioned by high export duties in the peak scrap prices period, decrease of customs terminals for scrap revenue number to 10 in Russia, world scrap prices and steel output decrease is quite noticeable against steel semis and rolled steel export growth.
Scrap import dropped even more, to 3 % of the last year figures, and main decrease touched the import from Kazakhstan which is the biggest supplier. However, imported scrap always made less than 1 % of total consumption in Russia.
Scrap procurement volumes decreased by 59 % which looks quite natural for those who knows what scrap procurement companies had to undergo last year: scrap process fall, non payments and discounts for already shipped scrap, and export limitation by only 10 customs terminals in Russia.
Scrap procurement recovered actively in Q1. In April its volumes decreased by 25 % and grew in Q2. Nevertheless, seasonal dynamics is quite uncommon: there is temporary splashes instead continuous growth of scrap procurement volumes whereas average monthly level remains low. According to preliminary results of the H1 year scrap procurement volume in Russia in 2009 will make not more than 15 million tonnes against more than 28 million tonnes in 2008 and more than 30 million tons in 2006 to 2007.
The results of these dramatic decrease are as follows
1. Inability to recover former scrap procurement volumes due to the bankruptcy of some companies which can lead to scrap shortage and prices jump at the demand increase.
2. Increase of energy consumption and environment pollution by integrated plants which switch to their own iron ore raw materials.
3. Significant part of steel scrap from industrial and household wastes was sent to disposal fields instead remelting, which is harmful to environment. But anyway in June scrap purchases by metallurgists grew by one-third and reached 54 % of last year level.
Scrap export volume grew but made only 21 % of last year figures. Anyway, gradually market rally gives hopes that the worst times for scrap procurement companies have been passed. Despite scrap procurement volume increase in June by more than 25 % as compared with May, they are still below than 50 % of last year volumes. This is the biggest production fall among all ferrous raw materials markets.
Due to the limitations of scrap export, it decreased in April by 13 % to 213,000 tonnes after the rally in Q1. In May there was stagnation and in June scrap export grew to 258,000 tonnes up by 21% against more than 1 mio tons in June 2006 to 2008. Nevertheless, due to transportation costs increase and high customs duties Russian steel scrap lost its competitive ability in the most of the markets and its export became unprofitable for scrap procurement companies. The result is fall of scrap procurement industry and decrease of customs payments.
Russian scrap supplies to its biggest buyer which is Turkey fell by 13.6 times. The supplies to Spain decreased by 3.4 times, supplies to South Korea fell by 8 times, supplies to other countries fell by about 10 times totally. The supplies to Belarus Steel Works only have increased by about 40 % which made Belarus the biggest buyer of Russian scrap.
Scrap procurement volumes as well as its consumption grew fast in Q1 and reached 71 % of last year figures in March. However, hopes for the maintenance of this level fell as early as in a month. In Q2 there was gradual recovery of consumption to 54 % of last year figures. As per the estimations, in 2009 scrap consumption by Russian mills will make about 11 mio tonnes which are less than the results of last three years.