NPI’s Impact on Stainless Scrap Demand
At the BIR Autumn 2024 meeting in Singapore, experts discussed key issues in the stainless scrap market. A major factor affecting demand is the increasing availability of nickel pig iron (NPI), particularly in Southeast Asia. NPI, a lower-cost alternative to nickel, is increasingly used in Asian melt shops, diminishing the need for stainless scrap.
Jayprakash Sahu of BigMint noted that India’s stainless steel production grew by 20% in the first half of 2024. However, demand for stainless scrap decreased by 3%, as billet imports from Sweden and Indonesia began replacing scrap. The rise in billet imports coincides with Indonesia’s restrictions on NPI exports, which have pushed more billet into the market.
Global Market Dynamics and Regional Trends
The outlook for stainless scrap demand varies significantly by region. In Europe, Omar Al Sharif from Sharif Metals Group observed disappointing performance, far below even the most pessimistic forecasts. On the other hand, the Middle East saw growth, while Japan maintained stable demand. In the U.S., uncertainty ahead of the elections further slowed scrap purchases.
Despite this, Joost van Kleef of Oryx Stainless remains optimistic. He pointed out that global decarbonization efforts could significantly boost demand for stainless scrap. The carbon footprint of stainless scrap is much lower than using virgin materials. For example, producing one ton of metal with 100% scrap results in only 0.8 tons of CO2 emissions, compared to 7.8 tons without scrap. Many European mills have already achieved a 90% recycled content ratio, underscoring their commitment to sustainability.
Price Discount Shows Signs of Improvement
Stainless scrap prices, which have been volatile, are showing improvement. Vegas Yang of HSKU Raw Material Ltd. explained that before the 2008 financial crisis, the price discount reached 95%. However, NPI production and policy changes in Indonesia suppressed scrap prices, dropping the discount to 55% in 2022. In 2024, Yang observed that the discount has improved and is expected to stabilize between 75% and 80% in the coming years. He also emphasized that the European Union’s Carbon Border Adjustment Mechanism (CBAM) may further support scrap as a preferred material, creating a more recycler-friendly discount rate.
The Future of Stainless Scrap Amid Ongoing Challenges
The BIR World Recycling Convention, held in Singapore in October 2024, highlighted critical shifts in the global stainless scrap market. While the market faces significant challenges, especially due to NPI and billet imports, sustainability efforts may play a key role in the future demand for stainless scrap.
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