Posted on 10 Feb 2022
February delivered to mill prices for ferrous scrap in Germany and many other European countries are expected to rise by a minimum of €20-25/t ($23-29/t) from January levels for all grades because of strong export demand and tight supply.
One Luxembourg mill was heard to have given bid indications to some suppliers for February delivery at plus €30-35/t from January prices for E1 and E3, and plus €20-25/t for new scrap and turnings. It bid at smaller increases for new scrap compared to old scrap, even though supply for new scrap was tighter than old scrap, because it cut old scrap prices in January by around €5/t but kept new scrap prices unchanged.
Bid indications from some German mills were heard around €20-25/t above January prices for E2, E3, E5 and E8, and plus €30/t for E1 old scrap. But one southern German mill told its suppliers that it will only accept increases of €10-15/t for all grades.
Most suppliers were not overly eager to sell at mills' initial indications, even at the higher bids from Luxembourg. Some merchants said the very tight supply means they have little material to offer and mills will have to increase bids from current indicative levels to help suppliers boost collection. Others said the recent surge in Turkish deep-sea import prices has prompted many scrap exporters in Germany and Benelux to lift dockside purchase prices to levels around or even above mills' current bid indications.
The Argus daily assessment for ferrous scrap HMS 1/2 80:20 prices was $500/t yesterday, around $30-40/t higher than levels seen in the first half of January, when European domestic negotiations for that month were settled.
"And it looks like that Turkey prices will move even higher in the coming days, so it is not impossible for exporters to pay €410-420/t in the coming weeks," one supplier said. "So, we are weighing up options since we do not have a lot of inventory."
The strong resistance from suppliers to accept increases below €30-40/t from January has reduced some mills' appetite for February delivered material. Several German mills were this morning heard to have told their suppliers that they will not make any purchase for February and will wait until March to buy scrap again.
"They said scrap prices are too high because of the higher energy prices and that they are not running at full capacity," another German supplier said. "But I do not think they can completely stay out of the February market because they have good demand for steel."
Negotiations were also ongoing in southern Europe. Italian mills were heard to have already accepted increases between €10-30/t from January levels. Some Italian suppliers said they will seek another €10-20/t increase in the coming days because Italian mills cut prices in January while many other European mills kept prices broadly unchanged. German scrap suppliers said their negotiations with Italian mills were slow this month because Italian steelmakers were not willing to accept the same increases as indicated by German mills.
Several Spanish mills lifted domestic scrap prices by €15-20/t in the past two weeks, effectively cancelling the price drops implemented in the first half of January. Many suppliers said the increase was not sufficient. And they will ask for another €10/t increase in the coming days given the $30-40/t rise in Turkish import prices.
Source:Platts
