Brazilian ferrous scrap exports remain on the surge

Brazilian exports of ferrous scrap, a key input in steel manufacturing, have continued to surge this year, emerging as one of the sector’s primary alternatives in light of a persistently challenging domestic market and rocky prospects for the upcoming months. The sluggish demand for scrap from foundries and steel mills, grappling with difficulties in selling steel, has exerted downward pressure on raw material prices, which have remained unresponsive since the year’s outset.

In July, exports of metal scrap reached a staggering 58,376 tonnes, marking a remarkable 940% surge compared to the mere 5,614 tonnes shipped abroad during the same month in 2022. The period spanning January to July of this year witnessed the export of 411,762 tonnes, surpassing the 237,113 tonnes seen during the corresponding period in the previous year, as data from the Foreign Trade Secretariat (Secex) indicates.

Clineu Alvarenga, the president of the National Institute of Recycling (Inesfa), highlighted that due to a sluggish economy and weakened demand from prominent steel consumers like the automobile and civil construction industries, steelmakers have increasingly focused on vertically integrating production using their own inputs. This trend “discourages the utilization of recycled materials, which are collected and sold by collectors and recycling companies,” he explained. A similar trend can be observed in the paper and cardboard transformation industry, which is opting for more cellulose over recycled materials.

According to Alvarenga, the projection for this year anticipates a drop of at least 30% in domestic scrap demand, while exports are expected to reach elevated levels by December.

“The decline in interest rates in the country, as determined by the Central Bank in the last Copom meeting, and the improvement in employment in recent months bring some optimism for the second half, especially in civil construction. However, we remain pessimistic about our sector’s ability to react, which is likely to materialize only in 2024,” he stated.

The chart below displays data on Brazilian ferrous scrap exports (hs code 7204) shipped from maritime ports in containers between Jan 2019 and Jan 2026. The data is from DataLiner.

Brazilian ferrous scrap exports | Jan 2019 – Jun 2026 | TEU

Source: DataLiner (click here to request a demo)

As per the Latin American Steel Association (Alacero), Latin America’s annual production of crude steel surpasses 60 million tonnes, with global production nearing 2 billion tonnes. China, accounting for half of this amount, has witnessed substantial capacity expansion in recent years.

In terms of production capacity, the global sector reached a total of 2.463 billion tonnes in 2022. Effective production, in contrast, amounted to 1.885 billion tonnes, creating a surplus production capacity of 578 million tonnes. These figures underscore the sector’s substantial capacity to meet worldwide demand. Nevertheless, China remains the dominant player. With a production capacity of 1.15 billion tonnes and effective production of 1.018 billion tonnes in 2022, the country boasts an excess production capacity of 132 million tonnes, constituting 54% of global production.

The steel industry plays an indispensable role in countries’ economies and generates a considerable number of direct and indirect high-quality jobs (nearly 1.4 million in Latin America). Additionally, steel serves as the backbone of manufacturing and construction and serves as a vital input for other key economic sectors, including infrastructure, mining, energy, and transportation.

“Steel imports from Asia not only threaten industry jobs in Latin America but also the environment. The average carbon footprint in our region stands at 1.6 tonnes of CO2 equivalent per ton of steel produced, compared to the global average of 1.9 tonnes and China’s 2.2 tonnes of CO2,” Wagner emphasized.

Source: Monitor Mercantil

To read the original news article, see: https://monitormercantil.com.br/exportacoes-de-sucata-ferrosa-mantem-se-em-alta/

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