Russia's scrap procurement prices continue rising in June

Procurement prices for scrap in Russian domestic market, which have been showing a downward trend up to the middle of the last month, picked up at the end of May and continued their rise at the beginning of June. Starting from the beginning of June, majority of Russian steelmaker announced an increase in the procurement prices for scrap A3 by average Ruble 200-300 ($9.24) per ton depending on the enterprise. As before, the leaders are Severstal, MMK, NLMK and Mechel, whose procurement prices for scrap A3 crossed the mark of Ruble 5,700 ($210.8) per ton. The increases by the other major Russian steel mills are somewhat more moderate. Such a sharp increase in the procurement prices for scrap in the domestic Russian market can be explained by increased purchases of scrap by the domestic steel mills both due to the rise in the production and the current scarcity of scrap in the market. In the condition of the present scarcity of scrap, which resembles the situation of the beginning of the current year, Russian steelmakers are trying to buy as much material as possible. However, the reasons for the current scrap scarcity differ from those responsible for the scarcity at the beginning of the year. Thus, if at the beginning of the year for the deficit of scrap in the market were responsible the severe frosts and long winter, now the availability of the scrap in the market is affected by the slower rates of formation of new scrap as well as decline in a number of scrap collectors. As the consequence, the increased buying activities of the steelmakers have generated inevitable rise in procurement prices for scrap A3. For instance, Severstal, ZapSib and MMK all reported the increase in the volumes of scrap purchased during May by more than 20 percent. In addition according to the statistical data, the scrap collection level during the current year is lower than in last year. This also led to the price rise. Exchange rate: 1USD = Ruble 27.03