Local German scrap prices rise further in February, uptrend to continue in March

The local German scrap market has indicated further price increases in the month of February. The main reason for this rise was the lack of scrap availability in the region. As anticipated by SteelOrbis, demand has recovered somewhat in Germany during February, though mills are observed to be showing resistance to the price increase. Amid the slower economy in Germany, scrap generation in Germany has declined by fifty percent. “Along with the cold weather conditions negatively impacting collection activities in the past month, there is an economic slowdown, and so scrap generation has been disrupted,” a German source reported. SteelOrbis also understands that construction activities in the country are slower than usual. Since there are no new constructions. Building demolition is also slower. Generally, the performance of the manufacturing sector is below normal. “Interest rates are very high in Germany nowadays. This is unusual. This is changing people’s buying behaviour,” the source added.

Sub-collectors in the region state that they were forced to widen their activity range to be able to collect scrap. “Not just old scrap, but it is harder to access new scrap,” a source said. Italy is reported to be “very passive [in terms of local scrap demand], providing some scrap flow for Germany.” Another issue experienced in Germany is the lower water levels in rivers. As scrap is carried through the country or to the export yards, freight is now higher, while vessels can carry lower tonnages. “We were paying €11/mt for river transportation, but freight increased to €17-18/mt. There is a potential for a further rise if the water levels decline in the coming days,” a market player said. The euro-US dollar exchange rate has changed in favour of the Europeans, “providing them with a gain of €6-7/mt, but this has gone to the higher freight levels on rivers.”

The expectations for March are positive. Market players believe that the tight availability will provide support for prices. Also, Turkey’s import scrap market is on an uptrend. HMS I/II 80:20 scrap quotations are expected to exceed $445/mt CFR quickly. Under the current lively demand conditions, market players are in no rush to conclude sales to Turkey, to export yards or to sub-collectors. Also, some plants in the EU are coming back on stream. “People should remember that the construction season in Germany is approaching, hence structural steel production will increase in the coming period,” a source added. According to a German sub-collector, scrap collection prices in the Netherlands have reached €365/mt delivered. On Tuesday, an EU-based exporter shared bids at €345/mt DAP for HMS I/II scrap, €355/mt DAP for HMS I/II 70:30 and €365/mt DAP for bonus grade.

According to the latest data provided by the BDSV, in the first 20 days of February scrap prices moved up by €3.9-14.1/mt month on month. Additionally, the year-on-year decrease is now in the range of €44.2-102.6/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