Local Italian scrap prices on the rise, further increases possible

Over the past week, local scrap prices in Italy have risen by an average of €10/mt and the expectations of most market participants are for further increases in scrap prices due to the scarcity of supply in the market.

According to sources, at the end of last week some steel producers with rather low scrap yard inventories accepted a €10-15/mt increase, creating tension in the local scrap market and leading to a generalized €10/mt increase in scrap purchase prices. “The market moved upwards and we had to adjust,” said an official at an Italian steel mill, adding that they are putting up a bit of resistance by buying lower tonnages. A scrap dealer confirmed this, commenting, “We cannot sell large lots. The steel mills are stalling”. The same is happening in the import market. “The French and Germans were talking about stability until the middle of last week, now they are asking for €5-10/mt more, but we are not going to buy at these levels,” the stee mill official said.

Among traders there is an expectation of further increases in scrap prices and they foresee a tense market in February and March. However, “it is still too early to know what the actual extent of the increases will be,” one source reported. Although producers are trying to counter the upward trend, some believe that scrap prices are unlikely to remain stable or to fall. “It is true that the scrap yards of some steel mills are quite full and that the finished steel market is still limping along. However, scrap availability is scarce and increases will probably materialize,” said the manager of one steel mill. Another source agreed, stating, “Production is low. Some plants stop at certain times of the day and others produce at lower rates to cope with the shortage of finished steel orders and high energy costs. The pace is lower, but production is still going on and further increases in scrap prices now seem inevitable”.

Prices include delivery and exclude VAT.

As far as Spain is concerned, there has been a €5-10/mt increase in local scrap prices by some mills, and market participants expect that the others will also raise their purchase prices by at least €5/mt in the coming days. According to sources, supply and demand are still low but fairly balanced. However, local scrap prices have risen to match import prices, as anticipated last week.

Prices include delivery and exclude VAT.