Some fundamentals have changed in the local scrap market in Poland in the first week of February. Market players were expecting the announcement of new purchase prices from mills to unlock last week’s impasse. Suppliers have been asking for an upward correction and it seems they will be satisfied only to a certain extent.
Finished steel production continues to reflect a slight recovery in finished steel demand, as Huta Częstochowa testified with the resumption of their heavy plate rolling mill on February 3. They have already collected orders for 13,000 mt and demand is expected to grow further.
On the other hand, mills have to fight other obstacles, energy prices first of all. “We don’t have enough stocks at the moment, because we didn’t buy enough scrap at the time and now we need to negotiate more volumes,” a source at a Polish mill said. “Suppliers know that, and, since scrap availability [in the local market] is on the low side, they are taking advantage of the situation,” he continued. Low scrap availability is another factor which is exerting upward pressure on scrap prices, paired with slow manufacturing rates which affect the availability of bonus grades. Another factor that needs to be taken into account is the euro-zloty exchange rate, which, according to the European Central Bank, stood at €1 = PLN 4.2065 on February 6.
According to sources, scrap suppliers are trying to obtain a €20/mt rise in sales prices to mills, but mills seem ready to accept only a €12-15/mt increase. However, since a number of steel producers have not announced new prices yet, it is hard to say to what extent prices will increase. At the moment, HMS I purchase prices from mills are standing at around €300/mt delivered to mill, whereas for HMS II they are standing at €283/mt delivered to mill.
As for exports, collection prices for HMS I are standing at around €300/mt DAP, which is up €10-15/mt compared to last week’s levels.
To conclude, this upward movement both in local and export scrap markets is mainly following the trend in other European countries, as well as the increases in Turkey’s import scrap prices. In Poland, however, the increases have been higher compared, for example, to Italy and Germany.