Memories from the (ferrous) scrap heap of history

We all remember where we were on Sept. 11, 2001. Others are old enough to remember where they were when JFK was shot. These and other historical events changed the world.

Those involved in the commodity markets can’t help but also recall what the events meant for their markets. Whether they were a buyer, seller, trader, broker or agent, they remember where they were and what the market did.

Did they go long, did they go short, did they do nothing at all?

The coup attempt in Turkey earlier this month failed, but it got some industry veterans to jog their memories of other historic events. In this and future blog posts, we will look back at market-shifting moments, from dramatic changes in governments to natural disasters, terrorist attacks, declarations of war, invasions and economic booms and collapses.

Much like we just witnessed in Turkey, coup attempts began to unravel and ultimately seal the fate of the Soviet Union and related communist systems. Scrap industry veteran Nathan Fruchter, president of Idoru Recycling Corp., recounted three such pivotal moments in the Fall of Communism through the eyes of a scrap trader.


The Berlin Wall comes down: Nov. 9, 1989

The event: On November 9, 1989 the head of the East German Communist Party announced that citizens of the German Democratic Republic (GDR or East Germany) were permitted to cross the border into West Germany. Citizens took it a step further. That evening they swarmed the 28-year old concrete and barbed wire wall with hammers and picks and began to chip away at it. It took nearly two years for the complete demolition of the wall but that night began the first steps toward German reunification and the opening of East Germany to the rest of the world.

The effect: “It opened up East Germany to scrap exports. Many West German dealers were running to East Germany to wrap up supply sources and set up scrap yards. The Port of Rostock, the only East German port, opened up for bulk scrap exports. Scrap that had never been exported before came flowing out of East German territory. Of course, this all predates container business; it was all bulk.”

Today: Germany has become the largest shipper of ferrous scrap to EU countries. Germany exported 7.11 million mt of ferrous scrap in 2015 to fellow EU-28 countries, well ahead of France (4.89 million mt) and the Netherlands (2.5 million mt). Amongst those EU countries shipping outside the EU-28, Germany was the fourth-largest last year, exporting 824,000 mt of scrap outside the region.


Ukraine’s Independence: Aug. 24, 1991

The event: Ukraine adopted an Act of Declaration of Independence in the summer of 1991 and other countries began to recognize their independence later that year.

The effect: “This ushered in the opening of the Ukrainian sea ports to western shipping lines and ship owners. As a result, Ukraine became a bulk exporter of ferrous scrap cargoes. Our scrap team, with the help of an amazing local supplier, became the first to export bulk cargoes from Ukraine to Turkey, South Korea and shortly thereafter to Taiwan, Indonesia, Thailand and Singapore. Buyers loved this new quality, called ‘GOST 3A,’ later on re-named Bonus Grade to do justice to the prime quality this material really was (a better product then straight HMS No. 1 but not quite P&S.) It was also a very clean product. With suppliers operating out of the five main ports of Nikolaev, Ilyichevsk, Odessa, Yuzhniy and Berdyansk, at some point we did close to 1 million tons in one year.”

Today: Ukraine increased its ferrous scrap exports 32% from 2014 to 2015 to bring total annual volumes to 1.21 million mt. Its scrap export markets are fairly captive, as Ukraine exported 98% of its scrap in 2015 to Turkey and Moldova. Of the total, Ukraine sent 931,000 mt across the Black Sea to Turkey and 252,000 mt to its landlocked neighbor to the west, Moldova. Eventually, with the arrival of the container business, the bulk exports to Asia stopped. Ukraine ranked 16th among global scrap exporting countries in 2015. Ukraine continues to have a larger impact as an exporter of pig iron and billet.


The dissolution of the Soviet Union: Dec. 26, 1991

The event: The winter holiday season of 1991 saw disintegration of the Soviet Union into 15 separate countries.

The effect: “The export of scrap had always been banned by the Soviet Union. With the end of the Soviet Union, almost all of the ex-Communist bloc countries with Baltic Sea ports (Poland, Lithuania, Latvia, Estonia and Russia) in addition to Finland and countries with Black Sea ports (Romania, Bulgaria, Ukraine, Georgia and Russia) started to export ferrous scrap in bulk. Even landlocked ex-Russian Republics of Kazakhstan, Uzbekistan, Turkmenistan, Tajikistan and Kyrgyzstan joined the bandwagon and started some exports by rail to China.

“This also opened up the Far East Russian ports of Vladivostok, Nakhodka, Petropavlovsk-Kamchatsky and Slavyanka. These became natural sources for the South Korean steel mills. As a result, they immediately stopped all European buying. Believe it or not, in those days we actually shipped bulk cargoes to South Korea from the UK, Rotterdam, Poland and even Hamburg. Slowly they also stopped buying US East Coast cargoes and limited their US purchases to West Coast cargoes.

“There was so much scrap in Far East Russia, first, second and third generation of good quality material, that many savvy Korean traders flocked there to wrap up agreements with Russian scrap processors. So much so that if you wanted to buy scrap there, you needed to enlist the help of a Korean trader who had mastered the Russian language and had a protected source. The extra availability of scrap was offset by demand. Prices did not fall because everyone was in a steel production expansion mode.

“The quality in the first 5-10 years was very good and dense because there had never been any scrap exports from these countries and their old railway systems, hundreds of half sunken naval ships and bridges were being scrapped to make way for newer modern trains and ships.”

Today: “Today the quality from the Black Sea and Baltic Sea has dropped but Far East Russian scrap quality is still very good.”

Russia is now the world’s fifth largest ferrous scrap exporter behind the US, Japan, Germany and the UK. In 2015 Russia exported 5.58 million mt of scrap. Since the opening of its Far East ports, South Korea has remained a major importer of Russian material with 797,000 mt of material arriving to its shores last year. The top buyers of Black Sea and Baltic Sea Russian scrap last year were Turkey (2.28 million mt), Belarus (1.2 million mt), and Spain (733,000 mt).

More recently, Russia’s role in global raw material markets has shifted somewhat to being a large supplier of scrap alternatives. Russia is amongst the top pig iron exporters in the world, along with Brazil and Ukraine, and amongst the top billet exporters, along with China and Ukraine.


Discount Heating Oil Prices is a company where one can find the lowest home heating oil prices. The company also provides delivery assistance to your home punctually and securely. Just visit the official website, enter your zip code, browse the lowest price available on heating oil in your place and click on the “buy now” button. Getting discount heating oil in Massachusetts is now just a click away from you


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s