Local German scrap market follows diverse trends depending on availability

The anticipated increase in the local German scrap market in September has failed to materialize as several German mills have decided to take a break or cut production rates against higher energy costs. As a result, scrap demand in Germany is lower than expected, while the downward trend in the export segment has not helped either. The increase observed in prices of E40 and E5 grades over the past month was due to the lack of material, SteelOrbis understands.

As European steel producers announce their intention to cut capacity utilization rates in the coming month, it is being evaluated whether this may lead to a price decrease in October. The majority of SteelOrbis’ sources think that mills’ production cuts are not enough for prices to decline. “Inflation is too high in Germany. This has not been seen for decades,” a source commented, adding, “The people collecting scrap from the streets are failing to pay their bills, hence they will ask for higher prices in the coming weeks or they will stop collecting.” Some sub-collectors told SteelOrbis that they have covered their sales for 2022 by their sales done in the first eight to nine months of the year, and so they may decide to stay out of the market until the end of the year, only meeting their commitments resulting from previous contracts. Also, financial problems are observed for new contracts. Another source reported that they have failed to open letters of credit in some situations due to liquidity problems. Furthermore, transportation on rivers are dominated by coal. “Not just due to the tonnages but also due to more attractive price levels, ships prefer to carry coal instead of scrap,” a source commented, adding that they are forced to pay €10-15/mt higher for freight on rivers. The collection prices at European export yards are reportedly at €300/mt today, September 21, but scrap flow is on the low side.

Germany-based contacts believe that local scrap quotations will most probably move up in October. The approaching winter, high inflation, rising costs and problems regarding scrap flow are the main reasons for this forecast. “The lower scrap flow and lower production rates may create a balance in the market. Actually, right now prices are stable in Germany,” a sub-collector stated. A German supplier also said that domestic scrap prices will not decrease in October even if the situation is not so good. Another SteelOrbis contact said; “I think we will have a clearer picture next week or at beginning of October. Energy costs decrease a little bit but the situation is still fluid and can change rapidly. We need a crystal ball [to guess on prices].”

According to the latest data provided by the BDSV, in the first 20 days of September local scrap prices moved down by €5.5-10.4/mt for some grades, while they have increased by €7-12.4/mt for others, month on month. Additionally, the year-on-year decrease is now in the range of €22.1-80.6/mt. Prices are average prices for domestic transactions across Germany in the first 20 days of the given month. The prices are provided by Bundesvereinigung Deutscher Stahlrecycling-und Entsorgungsunternehmen e.V. (BDSV).

Specifications:

E1 - Old steel scrap: thickness ≥ 4 mm, maximum dimensions 1,5 m x 0,5 m x 0,5 m
E2/E8 - New steel scrap: maximum dimensions 1,5 m x 0,5 m x 0,5 m
E3 - Heavy old steel scrap: thickness ≥ 6 mm, maximum dimensions 1,5 m x 0,5 m x 0,5 m
E40 - Shredded scrap: excluding incinerator steel scrap and collection scrap; density ≥ 1,1 mt/m3, Fe ≥ 92%
E5M - Turnings: excluding iron and automatic steel turnings