Stainless Scrap Faces Growing Competition from Nickel Pig Iron (NPI)

Demand for Stainless Scrap Struggles as NPI and Billet Imports Dominate Global Market
NPI Dominance Reduces Stainless Scrap Demand
At the BIR Autumn 2024 meeting in Singapore, experts from the stainless steel industry discussed the ongoing challenges facing stainless scrap. Panelists highlighted the increasing competition from nickel pig iron (NPI), which is flooding the market, particularly in Southeast Asia. NPI, a cheaper alternative to nickel, has continued to supply Asian melt shops, overshadowing the demand for stainless scrap.

Jayprakash Sahu of BigMint, an Indian business information firm, pointed out that India’s stainless steel production had surged by 20% in the first half of 2024. However, the demand for stainless scrap had actually decreased by 3%, with billet imports from countries like Sweden and Indonesia replacing the need for scrap. This trend reflects the shift toward semi-finished billet imports as NPI export restrictions in Indonesia push billet exports higher.

Mixed Outlook for Regional Markets
The panelists offered a mixed outlook for stainless scrap demand globally. Omar Al Sharif of Sharif Metals Group noted that the European market had underperformed this year, even worse than the most pessimistic forecasts. On the other hand, the Middle East market had seen growth, with stable demand in Japan. In the U.S., Al Sharif cited political uncertainty ahead of the upcoming election as contributing to a slowdown in scrap purchases.

Sustainability Push Could Boost Scrap Demand
Despite these challenges, Joost van Kleef of Oryx Stainless, based in the Netherlands, was optimistic about the long-term prospects for stainless scrap. Van Kleef pointed to the growing global commitment to decarbonization, which could significantly increase demand for scrap. The use of stainless scrap in production reduces emissions, with the carbon footprint dropping from 7.8 tons per ton of metal produced with no scrap, to just 0.8 tons using 100% scrap. European mills have already achieved a recycled content ratio of 90%, demonstrating the industry’s commitment to sustainability.

Price Discount on Stainless Scrap Shows Signs of Recovery
The price discount for stainless scrap, which has been volatile over the years, has started to improve. Vegas Yang of HSKU Raw Material Ltd. noted that the discount had been as high as 95% before the financial crisis of 2008. However, the rise of NPI production and policy changes in Indonesia led to a prolonged suppression of scrap prices, with the discount rate falling as low as 55% in 2022. This year, Yang observed that the discount has improved, with expectations to stabilize between 75% and 80% in the coming years. He also expressed optimism about the European Union’s Carbon Border Adjustment Mechanism (CBAM) helping to sustain scrap as a preferred raw material, with a recycler-friendly discount rate.

BIR Convention Sheds Light on Scrap Industry Dynamics
The discussion took place during the BIR World Recycling Convention held at the Raffles City Convention Center in Singapore from October 27-29, 2024. The event provided key insights into the ongoing shifts in the global stainless scrap market and the factors driving these changes.