The Italian scrap market has started the New Year in a problematic fashion, just as it closed the previous year.
Europe is confirming the rising trend for scrap prices in a context of material shortages, exacerbated by the very bad weather conditions which are delaying scrap deliveries. Another reason for the shortage of scrap is the low production rate of car manufacturers.
Moreover, it needs to be considered that countries in the east, and China in particular, are driving the market.
In Italy, some mills had shorter holidays than expected - a situation which came as a surprise to some scrap yards which before the Christmas holidays had sold off practically all the scrap in their stocks.
On the other hand, the finished steel market in Italy is still weak. Local mills are trying to hike their prices but have not been able to attract any orders at the high price levels. On Wednesday this week a €30/mt increase was seen in the rebar price even though the previous increase had not yet been fully accepted. Currently, steel demand does not appear sufficiently strong to sustain high raw material prices.
Looking at the prices of scrap in Italy, demolition scrap is in the range of €210-220/mt, shredded is standing at €225-235/mt and busheling is at around €235-240/mt, with some qualities reaching €250/mt. All prices include delivery.
At this point the market is waiting to see if finished steel demand will support the new scrap prices. If not, scrap prices are likely to halt their growing trend, though no decrease is expected in the short term.