[ferro-alloys.com]Colombia's lack of adequate local ferrous scrap is affecting the country's steel industry as it needs more material to produce steel, Colombian steel association Andi and market sources said this week.

"Steel players are very concerned with the situation as the scrap market is not very clear in Colombia, and scrap dealers are choosing to export over to sell it domestically," a mill source said.

According to Andi, the five domestic long steel producers are the main ferrous scrap consumers -- with around 1 million mt/year. Ferrous scrap represent around 75% of all material used in the steelmaking process in Colombia, and represent around 65% of the costs of the final product.

"Although scrap production in the country has grown, the country faces an acute shortage of the material that is severely limiting the growth of steel production in Colombia," executive director of Andi Maria Ospina said. "In fact, although the Colombian steel mills have an installed capacity of 2.2 million mt/year, enough to meet all the national demand, today they only use 64% of this capacity, due to the difficulties to obtain scrap," she said.

According to Ospina, for the steel industry to increase its utilization of installed capacity from 64% to 80%, around 1.66 million mt of scrap is required. However, steelmakers only have access to about 980,000 mt, according to 2017 data from Andi.

The Colombian scrap market is divided into three groups: suppliers, consumers and international traders. The first group includes large local scrap merchants, who have formed a stable link in the chain for a long time. They are located in the main cities of the country and promote the concentration of small recyclers in collection centers of the material for the later sale in large volumes to consumers.

The second group includes the consumers, according to Andi, that are made up of the iron and steel industry players, such as steelmakers that require this vital input for steel production in the country.

The third group is of international scrap exporters, which take the material abroad. "It is pertinent to clarify that only two companies concentrated more than 60% of total scrap exports in 2018," Ospina said.

"Colombian exports of ferrous scrap increased in recent years, especially in the first half of 2018, which recorded the highest export level of the entire period analyzed at 42,292 mt and whose variation with the immediately previous half was a difference of 22%," Ospina said. The projected number of exports at the end of 2018 is 85,000 mt, representing around 15% of the scrap deficit that the national industry requires.

According to data from the steel association, Taiwan (61%), South Korea (20%) and Thailand (4%) are the main destinations of the Colombian ferrous scrap.

（S&P Global Platts）

• [Editor:王可]