MAC/20: Mines and Communities

Brazil: is iron/steel recycling on the rebound?

Published by MAC on 2011-03-01
Source: Business News Americas

Last summer, a Brazilian plan was mooted by steel-makers, to cut the price of domestically-sourced scrap iron and steels, while increasing their import.

This would inevitably have threatened Brazil's own output of recycled materials (by under-pricing them), and impacted on the livelihoods of many workers, as well as potentially boosting the expansion of damaging mines.

See: Steel producers to enforce scrap price cut

Now, thanks to the recently improved market for domestic scrap metal, it seems the threat may have abated - at least for a while.

Demand for scrap improved in 2010 despite imports - Brazil

By Fernanda De Biagio

Business News Americas

14 February 2011

The upturn in the domestic economy and higher demand from steelmakers boosted consumption of scrap metal in Brazil last year versus 2009, when the sector suffered from the effects of the global economic crisis, national association of non-ferrous, iron and steel scrap companies Inesfa president Marcos Sampaio da Fonseca told BNamericas.

Brazil's consumption of scrap was at 9Mt last year versus 8.2Mt in 2009, the executive said.

Nevertheless, demand for domestic scrap in 2010 could have been higher as the sector was impacted by increased import volumes. Imports of steel products jumped 154% to 5.9Mt last year, according to national steel industry association IABr.

"In 2010, production of Brazil's electric arc furnaces increased 23%, which gave a boost to the scrap sector as well," Fonseca said on the sidelines of a conference in São Paulo. Electric arc furnaces use scrap and pig iron as their main inputs.

Last year, Brazil's scrap sector exported less versus 2009 as domestic demand could absorb the volumes available in the country, the executive added.

Approximately 5% of the scrap generated in Brazil is exported. "Exports in the sector remain strong, even though the volume sent overseas is low compared to what is consumed locally," Fonseca said.

The export market emerged as a good opportunity for the national scrap industry in 2009, when local steelmakers and foundries' demand slowed down considerably.

When the sector started exporting, the prices were not at ideal levels, but at least the industry was able to keep operating, according to Fonseca.

The executive spoke at the Steel Business Briefing Brazil Scrap 2011 forum.

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