Hunger for Steel Causes Scrap Iron Price to Soar
Friday, 09 May 2008
The price of scrap iron has been soaring, turning the once humble material into a treasured and protected commodity. The international price of scrap iron rose by 36 percent last year, and in just the first four months of this year it has leaped by 73 percent. Over the past three years the price has increased 2.5 times. The skyrocketing price is the result of surging demand for less costly metal in the wake of price hikes for iron ore. Another reason is the growing use of scrap by steelmakers in Europe and Japan looking to reduce greenhouse gas emissions, as scrap emits much less carbon dioxide than iron ore when making steel.
With prices rising, "resource nationalism" is kicking in, with Russia and Taiwan imposing controls on scrap exports. Meanwhile countries around the world have been plagued by metal thieves who steal any kind of iron they can get away with, from manhole covers to gates, guardrails and even bridges.
Scrap welcomed as eco-friendly material
Last Friday the local price of imported Japanese scrap iron was US$690 per ton, up $80 (11.3 percent) from $610 in early April, and more than 72.5 percent higher than $400 in early January. The price of domestic scrap iron also leaped from the W300,000 (US$1=W1,026) per ton range in early January to W600,000 in early May.
Just as escalating demand for iron and steel in China and India has pushed up the price of iron ore, it has also pushed up the international price of scrap iron. Scrap is now viewed as a valuable resource, as steelmakers in advanced countries concerned with regulating carbon dioxide emissions are using more of it.
Scrap iron is melted down in electric furnaces and used as a raw material in steel H-beams and reinforcing bars for construction projects. Because scrap has many impurities, the quality of the resulting steel is lower than that of steel made from iron ore. But because it emits less than one-tenth the carbon dioxide in the steelmaking process, scrap is considered more environmentally-friendly.
Since early this year, Nippon Steel and JFE Steel Corp., two Japanese steelmakers that use blast furnaces, have increased their use of scrap in the melting process from 9-10 percent to 13-14 percent. By mixing molten iron ore with scrap, they have reduced their overall carbon dioxide output.
In a recent lecture to executives and employees, POSCO chairman Lee Ku-taek said, "Advanced steelmakers in Europe and Japan are using more scrap iron when melting iron ore to reduce their carbon dioxide emissions. POSCO should take similar steps."
Surging scrap metal theft around the world
The price of scrap iron has risen partly because Russia, one of the largest scrap exporters, has greatly reduced its exports. In the 1990s, Russia contributed to pushing down the international price of scrap by selling old and outdated Soviet-era tanks and heavy industrial machinery. But since early this year it has curtailed its scrap exports in response to a sudden surge in domestic demand for iron and steel.
In February, Taiwan, another major exporter of iron and steel, introduced a system that compels exporters to obtain government permission before exporting scrap. Taiwan was also responding to hikes in the price of scrap caused by its own increasing demand for iron and steel. "With prices skyrocketing, 'resource nationalism' is raising its head to protect scrap iron as a raw material," a POSCO official said.
Countries around the world have been plagued by scrap iron theft. Since early January, thieves in Korea have stolen manhole covers, LPG canisters, wrought iron tree guards, steel gates, and farm machinery parts. Britain imposed controls on scrap iron dealers after guardrails and even street lamps began disappearing. And in Khabarovsk, a city in the Russian Far East, traffic was thrown into chaos last December after night-time thieves made off with an 11.5-m-long steel bridge.
Source: Chosun
