Local scrap price increases have also been observed in Germany and Poland this week. The main reasons lie in the fact that scrap demand from both local mills and export yards is in line with the average needs for this time of the year, but scrap availability is lower than demand due to the harshness of the winter weather conditions.
Local mills in Germany have increased scrap purchase prices by €10-20/mt depending on the producer and category. More precisely, one producer in the western part of the country has increased scrap purchase prices by €20/mt, while another one in southwestern Germany has increased them by €10/mt for old scrap and by €15/mt for new scrap. A third producer in eastern Germany has also reported having increased its scrap purchase prices by €10-15/mt. According to sources, the average price of E1 scrap in Germany currently stands at around €280/mt delivered to mill, which is the same as the DAP-based price paid by exporters at yards for HMS I/II 80:20.
Sources at two different scrap traders in Germany have also reported the persistence of logistical problems, both regarding truck and rail transport, as well as water transport. Water levels in the Rhine are in fact lower than the seasonal average, which has bolstered freight costs, and the German national railways have increased transport charges by 7-11 percent to around €55-65/mt. "With only a €20/mt difference [between the prices of E1 scrap in Germany compared to Italy] and these transportation costs, it is impossible to be competitive," a German scrap trader who also sells to Italy said.
As for Poland, the first rumors circulating in the market report increases in local scrap prices by €10-15/mt for January negotiations, and low availability of incoming material both at mills and at export yards. This is partly due to the winter cold - temperatures in Poland have fallen to -25°C - and partly because of the export ban introduced by Ukraine at the beginning of the year.
"We remain extremely cautious on [sales] volumes at the moment. [Scrap] inflow, is really low, if any. This is a difficult time," a Polish-based exporter said. According to SteelOrbis’ estimations, scrap collection prices for HMS I at export yards are expected to be around €275/mt DAP, in line with scrap prices at ports in other northern European countries, but there has been no official confirmation of this level by the time of publication.