At the end of the winter holidays in Europe (around December 19-January 12), the European scrap market has remained mostly cautious and is awaiting future developments. However, market players in European countries are already talking about possible scrap price rises, which are mainly driven by the expectation of an increase in finished steel prices linked to the implementation of the Carbon Border Adjustment Mechanism (CBAM).
"These are transitional days," an Italian market player said, adding, "It is legitimate to think about increases, but producers prefer to remain cautious for the moment." The same source stated that a couple of Italian mills have agreed to increase scrap purchase prices by an average of €10/mt compared to late November-December levels, and the same information has been confirmed by the representative of a local steel mill. “Personally, I’m not in great need to restock, but I am aware that I will have to buy at higher levels. I aim at least to remain in the lower end [for scrap price increases]”, he said.
All sources interviewed by SteelOrbis in the Italian market said they expect scrap price increases in the coming weeks, but for the moment these are only theoretical, also because not all players have resumed full activity after the winter holidays.
As for the German market, several sources have reported increases in scrap purchase prices by local mills in the range of €5-10/mt. These indications are in line with one major producer’s need to restock in view of the imminent commissioning of its new electric arc furnace and with the increase in scrap collection prices for export in northern Europe. In addition, an Austrian manufacturer has announced higher scrap purchase prices by €10/mt for all scrap categories for January contracts, which will certainly have an impact on price developments in both Germany and northern Italy.
Finally, it is worth noting that the news of the temporary embargo on scrap exports from Ukraine is causing several disruptions in the scrap market in neighboring Poland. A Polish market player has in fact reported that a transit scrap cargo that had been purchased before the embargo came into force has been blocked at the border and sent back to its origin, and it is not clear whether or not there will be the possibility of redeeming it. The news raises several questions about the future availability of scrap on Polish territory, since, although Poland is traditionally an exporting country, in recent times it has been relying on Ukrainian material to reduce the costs of raw material in its domestic market. For the moment, local Polish mills have not published new price lists for January purchases yet, but the expectation is for a price rise also in this case, because many producers need to buy after scrap suppliers were out of the market for almost a month during the winter holidays.