Most players in the local German market seem sure that new scrap price levels will come down by around at least €10/mt in the October round of purchases at the beginning of new monthly negotiations.
German mills have been reporting low demand for finished steel, and one source described the construction segment as “much better in Italy than it is in Germany”. Consequently, most local producers have decided to cut their scrap purchase prices by at least €10/mt, especially after one major mill announced they would cut them by €10/mt for E8 scrap and by €20/mt for other scrap grades. Moreover, the same producer - which had suffered an incident at one of its plants at the end of August - has not yet restarted production operations at the plant in question. Meanwhile, in Austria, a major producer has decided to cut its scrap purchase prices for October by €10/mt for new scrap grades and by €5/mt for old scrap grades. This means that some other producers in southern Germany will likely follow suit.
For the moment, although, local politics and institutions are largely focused on protectionism and decarbonization measures rather than on boosting the industrial sector. Early this week, the German economy minister Katherina Reiche unveiled a €6 billion federal funding initiative to accelerate the decarbonization of the country’s energy-intensive industries, and the Germany’s Social Democratic Party (SPD) has unveiled a proposal in which they urge the European Commission to enforce a “Buy European” strategy for steel and a robust trade protection framework aimed at ensuring fair competition and preserving domestic value creation.
Scrap suppliers have reported good availability of material coming from the local market, the Italian market and the eastern European market, which is being offered to mills at lower sales prices compared to last month. “The market is in buyers’ hands,” a source commented.
It il also worth mentioning that logistics remain a major issue in Germany, as trips by truck from Germany to neighboring countries and back are rarer and are becoming more and more expensive. One source has reported inland freight rates from Germany to Italy and back at around €50-55/mt.
As regards scrap exports, a source has reported that demand for HMS scrap is increasing, but the local market prices are still higher than export prices. In fact, E1 and E3 scrap prices in the local market in Germany are standing at around €270/mt and €290/mt delivered to mill, respectively, whereas collection prices to exports yards have been reported at €245-450/mt for the same grades.