Export price of ferrous scrap metal

IBISWorld expects the export price of ferrous scrap metal to fall by 3.4% in 2024-25, to $584.45 per tonne. Ferrous scrap export prices are heavily influenced by steel prices in global markets. Iron ore and metallurgical coal prices are both projected to ease over 2024-25, placing downward pressure on global steel prices and causing ferrous scrap prices to fall. Growth in global steel production is also set to outpace growth in global consumption over the year further contributing to a decline in ferrous scrap prices. The high interest rate environment and inflationary pressures will continue to weigh on key downstream markets like manufacturing, construction and real estate. For instance, the downturn in China's real estate sector will continue to dampen global steel demand, exerting downward pressure on prices.

Exports of ferrous scrap metal from Australia are primarily destined for Asia. Bangladesh, Vietnam, Indonesia, Taiwan and Thailand account for almost 80% of ferrous scrap exports in terms of volume and value. Export volumes of ferrous scrap have fluctuated over the past decade, peaking at 2.22 million tonnes in 2018-19. Export volumes have fallen over the past five years, partly due to slowing economic growth in major steel-consuming countries like China and geopolitical and trade tensions. Australia exported 1.71 million tonnes of ferrous scrap and waste in 2022-23 (latest available data), representing a fourth consecutive year of decline since 2018-19.

Global steel prices have risen over the past five years, pushing ferrous scrap prices higher. Iron ore and metallurgical coal prices have displayed significant volatility as external global events have hit supply and demand. Iron ore prices soared as Brazilian producers faced supply disruptions, causing prices to roughly double over the two years through 2020-21. Infrastructure spending in response to subdued economic conditions during the pandemic also supported steel demand. The Russia-Ukraine conflict caused global energy prices to rise, increasing steel production costs. Supply disruptions due to wet weather on Australia's east coast also caused metallurgical coal prices to spike in 2021-22, placing upward pressure on production costs for steel manufacturers and constraining steel manufacturing activity. These factors drove robust growth in the export price of ferrous scrap metal in 2021-22. Overall, IBISWorld expects the export price of ferrous scrap metal to rise at a compound annual rate of 5.5% over the five years through 2024-25.