Concerns are growing in Italy due to the ongoing downtrend in the local ferrous scrap market. After the sharp price decline witnessed in the first half of June amid a dramatic decrease in purchases by steelmakers, in the past week prices have fallen again. According to SteelOrbis sources, the decrease rate has been running at €10/mt ($13/mt) per week for all categories during the current month. Current local scrap prices are as follows:
Quality | Average price | |
22 June (€/mt) | 15 June (€/mt) | |
HMS | 280-300 ($350-375/mt) | 290-310 ($363-388/mt) |
Shredded scrap (E40) | 315-325 ($394-406/mt) | 325-330 ($406-413/mt) |
Busheling (E8) / (E8C) | 310-320/325 ($388-400/406/mt) | 315-325/330 ($394-406/413/mt) |
*Prices are for delivery to customer and exclude VAT
Steel mills still hesitate to conclude new scrap transactions, and they are still putting pressure on scrap traders to lower their prices. For example, currently the €280/mt ($350/mt) figure for lower heavy melting scrap (HMS) grades is just occasional, but scrap distributors tell SteelOrbis that the quotation is likely to become the rule by the end of June. Steelmakers are making more and more inquiries of scrap traders, but only to test the lowest price they can pay and they seldom conclude actual new bookings.
The issues generating current scrap downtrend are minimal demand for finished steel products both in the domestic market and also lately in the export markets, the upcoming holidays and production halts, and also scrap price decreases in other European markets. The last factor has a particular relevance: as in June the German market has recorded a sharp decrease, Italian steelmakers are buying some quantities of ex-Germany scrap. Moreover, it appears that in Germany scrap supplies are more abundant than in Italy, and so other downward movements could originate from the central European market.
The outlook for July is negative as well. No one believes that in this environment scrap traders will increase their prices. On the contrary, it is thought that the market is likely to slip down further. According to scrap traders consulted by SteelOrbis, the strategy adopted by steel mills is pretty unclear and does not allow traders to plan their own counter strategies. In fact, during downtrend periods normally transactions are focused mainly on lower qualities in order to decrease steel production costs, and this dynamic functions as a parachute to slow down the rate of price decrease. However, the few purchases concluded in the current period are quite harmoniously distributed among all qualities of scrap.
€1 = $1.25