Metallurgical engineering goes through a tough period, as the state of affairs hasn’t changed much since the early 2013. Japan, a solid international scrap metal dealer, has reduced the export of steel scrap in comparison with 2012 by 5.2% to 8.15 million tons, according to the materials of the Ministry of Finance; and the tendency remains actual for the first quarter of 2014.
Another alarming factor is the cost of materials falling in price. Therefore, scrap metal prices in Turkey in February fell to $20 per ton on average, which was one of the reasons for the decline in the regional market of long products. By the end of the February has stabilized, but the majority of consumers, creating reserves for the nearest future, have stopped scrap procurement. Thus, the quotations for scrap obviously will freeze for a few weeks at the current low level.
In East Asia in late February iron ore fell to its lowest level in seven months. Given that China’s steel production has recently experienced a decrease, returning to the same heights in the very foreseeable future seems unlikely. At the same time, the low cost of raw materials in the region contributes to the emergence of negative expectations associated with the cost of finished products.
Some experts believe that the problems of the world steel market can be solved by limiting the volume of supply. But as these problems simply cannot be considered as short-term, but fundamental, it should raise the question of a permanent disabling of overcapacities, especially in China. In fact, the Chinese government sticks to the policy for at least the last decade and even has some success, but the closure of outdated steel mills in the country still does not allow to balance the market.