Brazilian monthly scrap consumption down 50% in H1, Inesfa says

Monthly average consumption of steel scrap in Brazil was expected to have fallen by 50% year-on-year during the first half of 2020, amid lower demand from steelmakers due to the Covid-19 pandemic, local scrap association Inesfa said on Thursday July 2.

The association estimated that first-half consumption would have totaled 1.95 million tonnes, or 325,000 tonnes per month. Full-year 2019 consumption was 7.8 million tonnes, or 650,000 tpm, according to data from steelmakers’ association Instituto Aço Brasil.

Scrap generation levels have also fallen by around 50% this year so far, according to Inesfa. Economic stasis caused by the restrictions put in place to prevent Covid-19 from spreading has led to lower scrap generation in Brazil and higher scrap exports out of it, the association added.

Brazilian ferrous scrap exports totaled 316,145 tonnes in January-May 2020, up by 63.3% from 193,610 tonnes during the corresponding months of 2019, according to data from the country’s ministry of economy.

India and Bangladesh were by a significant margin the principal destinations of those exports.

Fastmarkets’ price assessment for steel scrap HMS 1&2 (80:20 mix) import, cfr Nhava Sheva, India, was $245-255 per tonne on June 26, down from $250-265 per tonne a week before and at its lowest level since $240-255 per tonne on May 29.

Ferrous scrap consumption had already fallen last year to levels seen a decade ago, Inesfa said. The 7.8-million-tonne total was the lowest since 7.4 million tonnes in 2009, when the sector felt the effects of the 2008 global financial crisis, according to Instituto Aço Brasil.

That volume compared with a record high of 11.2 million tonnes reported in 2013, equivalent to 931,000 tpm.

Such a significant drop in scrap consumption and generation does not bode well for the overall economy, Inesfa added, because the sector has more than 5,500 companies – mostly small- and medium-sized – and employs 1.5 million people directly and indirectly.

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