Local scrap prices in Germany and Poland up by at least €30/mt, outlook positive

Although SteelOrbis had anticipated an increase in the local German scrap market in April for the May-buy cycle, the size of the increase has been higher than initial expectations and reached around €30/mt on average. Market players state that during the month of May, some mills accepted €40/mt increases for old steel scrap in unofficial purchases.

The main reason for this rise in the local German scrap market has been the lack of available scrap and high demand. Since export scrap quotations are still more attractive as compared to the local market, German sellers have pushed their collected scrap to export yards, making it harder for domestic mills to find the tonnages they require. As a result, market players expect a further rise of €20/mt in the local German scrap market in June, while they added that, if Turkey’s import scrap prices hit $520/mt CFR, local prices may record a higher increase next month. Also, a major scrap supplier in Germany has drawn attention to the raw material crisis still felt in the automotive sector, saying that the chip and rubber shortage is causing production disruptions and may even lead to a halt, which would eventually take its toll on scrap quotations.

On the other hand, another market source from Germany states that the new contract period for automotive and engine producers is approaching and that these producers are trying to increase their scrap inventories. Having said that, the summer season is expected to result in lower water levels of rivers in Germany, which are heavily used in scrap transportation. This will mean higher freight rates as well as lower tonnages transported by rivers in the coming period.

According to the latest data provided by the BDSV, in the first 20 days of May local scrap prices mostly increased by €26.7-33.6/mt month on month, while the year-on-year increase in the first 20 days of May has reached €139-163/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

Meanwhile, scrap prices in the local Polish market have also increased by €30-35/mt month on month, with HMS I scrap prices moving up from around €355/mt DAP to approximately €385-390/mt DAP. The Polish market is quiet, according to market players, who stated that everyone is trying to meet their commitments from previous deals as the end of the month is approaching. Domestic scrap prices in Poland are expected to move up further in June, while demand in the local market is on the high side. Also, one producer in the country stated that the spread between rebar and scrap quotations is creating room for scrap prices to increase. Meanwhile, a scrap supplier in Poland commented that there is currently a shortage of scrap, which may cause another €20-30/mt rise in the local market.