ISRI’s Commodity Roundtables Forum is taking take place Sept. 22-24, at the Hyatt Regency Hotel in Chicago. The annual event attracts processors, brokers, traders, and other recycling professionals from around the world. Register here.
Commodities professionals from near and far are hearing about a marketplace still recovering from the COVID-19 pandemic at the 2021 ISRI Commodity Roundtables Forum in Chicago. Consolidation in the steel industry, China and India, and their impact on global manufacturing demand, and what the future will hold for electric vehicles and lithium-ion batteries, are on the minds of those attending the Ferrous and Nickel/Stainless roundtables. “There was a lot of great participation in the room today. We had a lot of questions on the impacts of industry consolidation on ferrous scrap recyclers, impacts of nickel price volatility on stainless steel recyclers, the outlook for how [government] infrastructure [spending] packages are going to impact demand for carbon steel and stainless steel going forward, and what the expectations are going forward for recycled commodity markets,” states Joe Pickard, ISRI’s chief economist and director of commodities.
“This year has really been unprecedented in the scrap and steel world,” Moderator Adam Dumes, vice president and chief commercial officer at Cohen Recycling, notes. The impacts of COVID-19 on manufacturing; pandemic-related extended unemployment benefits; the truck driver shortage; shipping backlogs; and more were discussed by the panel.
Pickard says according to the latest JPMorgan purchasing manager’s index, manufacturing hit a seven-month low in July, with China and Japan in economic contraction through July. U.S. ferrous export volume was up 12% year-on-year; the actual dollar value of those exports were up 70% over the year-ago period. Recyclers as well as manufacturers face the same three problems: supply chain bottlenecks, transportation difficulties, and labor shortages. “ISRI has been incredibly active with our contacts at the Office of the U.S. Trade Representative and the State Department,” to relieve pressures, he says. Likewise, ISRI is working to ensure recyclers have a seat at the table in federal, state, and local regulatory lawmaking discussions.
Blake Hurtik, editor of Argus Metal Prices, notes a sea change occurring in the domestic steel industry. Recently, consolidation occurred as Cleveland Cliffs acquired AK Steel and Argus properties; U.S. Steel acquired Big River Steel; and Icahn Enterprises indicated willingness to offload PSC Metals after 14 years of ownership. Overseas buyers continue to have an appetite for American ferrous, even with China, Japan, and Turkey imports lagging. Some recyclers have increased capacity in the South and Southwest. “The point is: bigger getting bigger, and [ferrous producers and recyclers] have money,” Hurtik says.
Margins aren’t what they used to be, notes Sean Davidson, founder and CEO of Davis Index. He notes that U.S. stainless steel capacity is growing in the South and Southwest, even as steel products ramp up in the Great Lakes. “U.S. Steel demand is forecast to grow between 7% and 8%. This is down from last year,” he says.
Internationally, “The U.S. is the only country which has a scrap utilization rate close to 75%. Europe is around 60-65%. India is now getting closer to around 80%. Most of the big mills are looking for scrap,” states Anil Shah. The president of Ni-Met Metals explains that slowdowns in the Chinese construction market have rippled through the commodities world, as materials traders hedge their bets. Meanwhile, Indian demand for materials is expected to recover soon.
It is difficult to know exactly when EV-driven demand for nickel or cobalt for rechargeable batteries will affect prices, panelists observed. “The demand for all those component metals is going to be significant,” Davidson says. He notes the impact of cryptocurrency on commodities trading also remains to be seen. “At this point, it’s devoid of fundamentals,” he comments.
“I made several notes as [Davidson and Shah] were talking,” Moderator Dave Bestwick, director of sales and procurement at Dominion Nickel Alloys Ltd., remarked at the end of the session.
The ISRI 2021 Commodity Roundtables Forum continues Thursday, Sept. 23, with a general session on financial risks and risk management, the Copper Roundtable, and the Electronics Roundtable. As on the first day of the event, plenty of networking opportunities are available. ISRI’s Women in Recycling and Young Executives Council cohost a late afternoon mingler at the Hyatt Regency hotel.
Photos courtesy of ISRI.