SteelOrbis talked with Israeli scrap supplier Arbel Steel's managing director Izak Istrik about the Israeli scrap and steel markets at the recent SteelOrbis Spring'12 Conference and 66th IREPAS Meeting held in London.
Can you give us an idea of the volumes in the Israeli scrap market?
Israel's domestic scrap supplies are about 800,000 mt per year,of which 500,000 mt is consumed in the domestic market,while 300,000 mt is destined for the export markets.Israel's main scrap export market is Turkey,with 95 percent of its total scrap exports going to this country,more particularly to the Iskenderun region in the south of Turkey,while the remaining five percent goes to Greece.
What are the most common scrap grades supplied from Israel?
The most common scrap grade is HMS I/II 70:30,which constitutes about 80 percent of the total supplies,while the remaining 20 percent is HMS I/II 90:10 which comes from the army.We have only a small amount of shredded scrap.
What problems do you face in your business?
Unfortunately,there are too many impurities in the scrap traded.This is why at Arbel Steel we decided to stop being a 100 percent exporter of scrap,and now exports account for just 20 percent of our total business volume.But this is not the only reason.Another reason is that in the last three years two domestic steel producers tried to push the government to impose export duty on scrap.After a long struggle,we succeeded in defeating their efforts,expending a lot of time and money of course.Also,lately Israeli finished steel demand has been booming,with increasing construction demand,and so local steelmakers are not only producers any more,but they are also importing products.Accordingly,they need us for imports and they are also buying rebar and wire rod.Consequently,the situation has remained at a sort of status quo.
In the meantime,ports in Israel belong to the government and are controlled by the unions.As Israel's demand for construction steel and also for other sorts of goods have increased lately,the traffic at the ports has shown significant growth.So it is better to stay away from the ports,if possible,given that port expenses are about$60-65/mt.
You mentioned that your company has reduced its share of export sales.Is this connected with the issue of port expenses?
Definitely,port expenses are exerting pressure on our margins.Besides,as I mentioned before,there is a significant issue regarding impurities in scrap supplies,which you have to be doubly careful about when you export the material.As a result,my company has decided not to concentrate on export sales nowadays.I find it unacceptable to send a cargo with even 1-1.2 percent impurity,so it would be shameful for me to deliver a cargo with 10 percent impurity.
What about Arbel Steel's scrap supply capacity?
Before the world economic crisis,our sales volume was about 100,000-120,000 mt,but now our sales volume has been reduced to about 60,000 mt.50 percent of our total supplies come to our yards to be cleaned and processed,while the remaining 50 percent goes directly from our own suppliers mainly to customers in the Ashdod area.
Could you tell us about the increases in Israeli finished steel producers'output capacities?
Until 2009,Israel's total rebar consumption was about 700,000-750,000 mt per year and this amount has now increased to about 1.2 million mt.However,Israeli mills'expansion opportunities are limited.For this reason,this growth is mainly supplied by imports and this is why we are not expecting any growth in the consumption of domestic scrap.
What are the local price levels for scrap in Israel and Israel's scrap export prices?
In the Israeli domestic market,scrap is being sold at about$380-385/mt and is exempted from VAT.When you decide to export,you need to add$60-65/mt for port expenses,as I said before,and you can sell it to Iskenderun,Turkey for about$400/mt CFR.With his price and quick shipment,an Israeli supplier may gain an advantage over ex-deep sea scrap supplies.
