(For other news from the Reuters Global Mining and Steel
Summit, click here)
By Carole Vaporean
NEW YORK, March 9 Schnitzer Steel Industries
Inc (SCHN.O) sees strong prices reflecting healthy demand for
U.S. steel scrap, driven primarily by export market
consumption, especially in Asian markets.
Chief Executive Tamara Lundgren told the Reuters Mining and
Steel Summit on Tuesday that industry discussion of prices in
the high $300s to the low $400s a ton were "generally correct"
for U.S. steel scrap exports.
"When prices were in the mid-$300s, we were back to
(strong) 2006 levels, and that was lower than where we are
today. That reflects the strong demand which came back very
quickly," the CEO said.
In late 2008, when demand for U.S. steel scrap tumbled,
Lundgren said, "We couldn't sell anything."
But the rebound was also steep, with demand quickly
returning to historically strong levels.
"And now they are very strong," the executive said, adding
that the only constraint to returning to record levels is U.S.
Increased manufacturing rates would generate more scrap to
feed export growth.
Many economists have pointed to an export-lead recovery in
the United States, and 80 percent of revenues from Schnitzer's
metal recycling business, its largest division, came from
Because of lower U.S. manufacturing rates, meeting growing
demand by extracting raw material scrap has become more
expensive over the last 18 months.
"Primarily because of negative and slow U.S. GDP, people
are taking down fewer buildings, throwing away fewer washing
machines, manufacturing less. So the actual raw material is
more expensive to pull out," she said.
In the export market, Schnitzer sells to all major steel
companies around the world. Even blast furnaces can use up to
20 percent scrap metal and some can take 30 percent scrap.
At end of the first quarter, Lundgren said, the recycling
company was on or near record pace for exports. Second-quarter
exports are forecast to do the same.
In fiscal 2008/09, which ended August 31, Schnitzer
reported 3.5 million tons of exported steel scrap.
For calendar 2009, its U.S. ferrous scrap exports grew by 4
percent and on a fiscal basis, the increase was 7 percent.
For the last 12 to 18 months China has been a large buyer
of ferrous scrap. India, Turkey, Malaysia, Vietnam and Egypt
are also among the 15 to 18 countries it sells into.
Though China's buying pace slowed during the lunar new
year, Lundgren said that was only a seasonal factor.
"There was a run-up right before the new year, then a run
down. We expect to see them back in the market. We see them in
the market on a regular basis," the executive said.
Turkey's steel manufacturing has slowed from a year ago
along with their consumption rate.
"They are buying, just not at the record rates they were in
2007 and 2008 when they were the No. 1 importer of U.S. ferrous
scrap. But it is still strong," she said.
Back in the United States, the CEO said, there is still no
sign of much-anticipated stimulus money for rebuilding
"There is certainly an expectation for the money. But it's
a question of timing and there is no word on that. The need is
dramatic. When you compare infrastructure building in Asia to
the U.S., we are in danger of falling behind."
(Reporting by Carole Vaporean; Editing by Richard Chang)