The month of January in the Italian market “was characterized by relatively quiet scrap collection activities which, fortunately, offset the widespread price reductions applied on purchasing prices by steel mills in the first half of the month. If scrap collection had been sustained, as in previous months, prices would have decreased much more significantly,” said Assofermet, the association representing Italian distributors of scrap, raw materials and steel products, in a note released this week. Assofermet added that January was also influenced by the pandemic situation, which led to staff reductions and therefore production slowdowns, and also by expensive energy prices, which in many cases led to reductions in work shifts. There continued to be a significant price gap between high and low quality scrap categories.
As for the month of February, scrap suppliers have “great expectations” which, however, at the moment “clash with the reality of steel mills which seem to want to hold still and not grant price increases, if not very limited”. Also, in the current month high energy costs, logistical difficulties and the pandemic situation may influence scrap negotiations and "can shift the current equilibrium at any time. Ubiquitous, however, is the difficulty and scarcity in the collection of scrap, which in the long term could unbalance the existing equilibrium towards possible price increases,” Assofermet noted
According to Assofermet, the first month of 2022 was more "dynamic" at an international level in terms of prices, in particular due to the lack of quality material in northern Europe. The divergent positions of steel mills and scrap suppliers led some big players to stop selling, causing further increases during the month. "Another factor that marked January in an important way was the cost of freight which, albeit slightly decreasing, always has an impact on the final price of the transported product. There are many expectations for price increases in February which could materialize from mid-month. The euro-dollar exchange rate fluctuations have raised some concerns, but also opportunities for buyers and sellers."
With regard to Turkey in particular, Assofermet underlined that January was characterized by substantial stability, and also a number of deals in line with the period. In the coming period, however, there could be price increases for scrap on the back of increasing finished product prices.
At the same time, "in the markets of Belgium, France and Germany, the scarcity of supply of quality material has continued, with a persistent and significant price difference between high and low categories. Factors such as expensive energy prices, the increase in transport costs and the pandemic situation have influenced the purchasing policy of steel mills, with a consequent reduction of outputs. The last part of January and the beginning of February saw a recovery in demand and a rise in prices that will certainly strengthen the stability and the rise in prices of finished products."