PRESS RELEASE

FOR IMMEDIATE RELEASE

Monday,2 June 2009

BIR WorldRecycling Convention

25-27 May2009, Dubai

PressReleases on Commodity Sessions

FerrousDivision

(followedby Shredder Committee):

Disappointmentover lack of contractual commitment

The ferrous scrap industryexperienceda “confidence shock” when some major consumers looked to escapefrom their contractual obligations in response to the global economiccrisis. But these obligations have since been fulfilled following“fruitful” discussions between the steel and scrap industriesunder the leadership of BIR, European federation EFR and Germany’snational federation BDSV, the BIR Ferrous Division meeting in Dubaiwas informed by its President Christian Rubach of Interseroh HansaRecycling GmbH of Germany.

EFR President Tom Bird ofSims MetalManagement later added: “The actions of certain steel mills both inthe EU and around the world have been very disappointing over thelast few months. The cancelled and renegotiated orders that many ofour members have had to face are a bad reflection on the steelsector.”

As for latest marketdevelopments inEurope, Mr Bird argued that further inventory reductions may berequired in the steel chain before a supply/demand balance can beachieved. Scrap collection across EU Member States has remainedrelatively robust “but inbound volumes in some regions have droppedas low as 50% year on year, with margins dramatically squeezed onshredder grades”. But he added positively: “I am still optimisticthat when this market turns, the streamlining of our businesses willpay dividends.”

The US domestic steelindustry isoperating at only 43% of capacity, reported Blake Kelley of SimsMetal Management. Nevertheless, scrap prices have remained high,possibly because supply has declined and US exports are continuing at“historic high rates”; and with blast furnaces shut down, thepercentage of steel made in scrap-hungry electric arc furnaces isprobably increasing, he added.

The speaker expects scrapprices to“stay in a narrow band”, controlled on the upside by steel pricesthat cannot increase too far before idled steelmaking capacityrestarts, and on the downside by the increased costs of collectionand processing, a relatively depleted reservoir of obsolete scrap,and heightened competition among dealers for available volumes.

Based on latest worldsteelAssociation data, Mr Kelley predicts that global apparent consumptionof purchased scrap will decline 107m tonnes this year. He stated:“The world does not need 1.4bn tonnes of steel today, as was theannualised run rate at the peak in June 2008.”

In 2009, Russian ferrousscrapcollection volumes are expected to struggle to a third of their 2008levels, according to Roman Genkel of PG Mair. Faced with a drop indemand both at home and internationally, it is doubtful whether anyof Russia’s steel mills are making a profit at present, he said.

The first of two guestspeakers at theBIR Ferrous Division meeting in Dubai, Tariq Barlas of Saudi Arabia’sAl-Tuwairqi steel producing group spoke of the need for a minimum1m-tonne scrap hub in one of the Gulf Cooperation Council countriesin order to meet the requirements of the region and of itsneighbours. Subsequently, Stefan Schilbe of HSBC Trinkaus &Burkhardt AG in Germany described China as “an important driver forcommodity prices” and predicted that the Asian giant wouldexperience GDP growth of more than 7% this year and of around 9% in2010.

In the subsequent meetingof theShredder Committee, Committee Chairman Jens Hempel-Hansen ofDenmark-based H. J. Hansen Recycling Industry mentioned in hisopening address that, following the substantial decline in commodityprices over recent months, it has become more important than ever forshredder operators to focus on efficiency.

And according to guestspeaker PranavCasewa of Kuwait United Chem Alloys Manufacturing Company, shreddedscrap offers the best route to optimising steel production at minimumcost. Among its many advantages, he added, is its significantly lowercost compared to hot briquetted iron (HBI).

The meeting in Dubai alsodwelt on keyconsiderations in selecting the most appropriate shredder for a givenapplication. Salam Sharif of Sharif Metals in the United ArabEmirates urged would-be operators to consider the density of materialrequired by steel mill customers. He also underlined the importanceof analysing environmental legislation and the grades of scraparising in a region to help determine the size and type of shredderrequired for a particular location.

During a discussionmoderated byAnthony Bird of the UK-based Bird Group of Companies, guest speakerRoy Woolcock of shredder manufacturer Seram UK pointed out that thecapacity of an installed shredder can be increased by changing themotor or by adding a pre-shredder. He had earlier informed delegatesabout a recent shredder design initiative based around incorporatingextra magnets “tuned to a lower efficiency” for reducing freecopper levels.

Having heard Mr Sharif notethat some15 shredders have been installed to date in the Middle East, ScottNewell of The Shredder Company LLC in the USA predicted that theworld shredder population of around 850 “could double in the next10 to 15 years”. Shredded scrap attracts a premium while thecurrent generation of “smarter and stronger” shredder plants canhandle a wider range of input materials, he said. Computer controlsfound on modern shredders “make better decisions than humans”,therefore helping to achieve higher-density, cleaner scrap and to usethe power of the main motor more efficiently, he added.

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