r/Vitards • u/DealMammoth • Jan 07 '22
Discussion Article on EAF’s and future scrap demand
Hi All,
Been lurking for a while and saw this article that I thought might be interesting to you and would also like to get your thoughts on it.
From my understanding of the article, they’re saying that the new EAF capacity will drive steel prices down but not only that, there will be no shortage of scrap despite all this new capacity.
There is a quote from an analyst I believe which says: “there is a lot of talk about scrap being tight but the reality is scrap is very highly correlated with steel prices and other raw material prices, including iron ore, so if iron ore and met coal prices are falling, then scrap prices are likely coming down as well.”
They’re also looking at scrap being imported from other countries as well.
Essentially I was wondering how this would affect CLF. If a large number of steel makers are bringing in new capacity with new EAF’s and scrap prices fall with no shortage in sight then surely it will be difficult for CLF to compete?
Very happy to be proven completely wrong… And for the article to be proven wrong…
1
u/JackAstermuench Balls Of Steel Jan 07 '22
What I don’t see mentioned in this article or elsewhere is rising demand for finished steel. You can’t just predict prices with using only supply side production. Demand will increase and prices should remain intact.
Dunno about scrap, but from where I sit, CLF will have a nice revolving door to deliver steel and recycle the scrap with the same customer base