In the last two weeks, scrap price increases of up to €70/mt depending on the grade of materials have been seen in the Italian scrap market, with busheling prices reaching as high as €400/mt. Trading activity has also increased in the period under review.
After having kept their scrap yards almost empty for quite a long time, steelmakers in Italy have recently started to buy scrap again. In the meantime, scrap availability has diminished because of the winter season, which this year is particularly cold. The tight supply situation will probably continue in January and February as well, when steel production will return to normal levels. Furthermore, steelmakers' end-of-year production shutdowns will be shorter than previously expected, and so in the near future the mills' scrap needs will be greater than earlier anticipated.
Current local offers of HMS are at €320-325/mt (here and below prices are for delivery to customer), local quotations of shredded scrap are at €365-370/mt and busheling scrap is at around €390/mt, though offers for high quality busheling reach €400/mt.
On the import side, it is reported that scrap availability is low due to several factors including the severe weather conditions in northern Europe, speculation by foreign suppliers, strong local demand for raw materials in Germany, and, also, due to the strong buying activity of Turkish steelmakers.
Many local market operators are quite concerned about the strong, rapid uptrend of scrap quotations, given that local demand for finished steel products has only slightly improved in the last few weeks. In other words, the current steel market situation is not strong enough to justify such scrap price increases. Some players fear that the market could decline rapidly at the beginning of 2011, just as it did a couple of years ago, while others think scrap prices will go up further in the next ten days, and will then gradually decrease in January due to the destocking activities of scrap suppliers for fiscal reasons.