Assessing the current state of the scrap market

How is the scrap market performing internationally? Assofermet, the Italian association of reference for companies in the trade, distribution, and pre-processing of steel products, recently released a note on the subject.

International/Turkish ferrous scrap

International/Turkish ferrous scrap experienced a challenging close to the year in December. However, it maintained a positive trend from the previous month, witnessing a decent revival in scrap and semi-finished products. This prompted end customers to replenish their dwindling stocks. Turkey saw peaks of USD 420-425/MT CFR, retracting somewhat immediately after the winter holiday season. The first days of January witnessed a reopening of transactions/pricing increases for raw materials, primarily scrap. In contrast, Asian markets, particularly India, displayed a general weakness due to a slowdown in domestic steel demand, impacting international price dynamics. Positive trends were instead observed in European markets, which remained overall stable in price contingent on demand, which varied across countries and time periods. Needless to say, tensions in the Middle East and the Suez Canal contribute to a worrisome scenario, making it premature to make predictions.

Stainless steel scrap

In December, steel mills witnessed reduced volumes, although these were in line with historical averages for this period. Despite the scarcity of scrap available in collection, recovery, and recycling facilities, quotations experienced decreases. Non-EU markets maintained aligned prices, even with significant €/$ exchange rate fluctuations. Super alloys faced significant reductions in spite of unchanged demand. High-speed steels also exhibited negative trends, with more moderate reductions compared to super alloys. Conversely, Widia maintained stable prices, putting a halt to its negative trend.

Refining cast iron

December witnessed further international price hikes, coupled with a notable surge in demand. The Italian market exhibited a revived interest in purchases; however the exact pricing terms for purchase contracts remain unclear. The ongoing price gap between the European market and the US/world market continues to persist.

Hematite cast iron

In December, transactions involving hematite cast iron in the foundry sector regained some momentum, breaking the chain of slowdown signs that had characterized the market in recent months. With the confirmed end of the price decline, some producers actively sought upward corrections. Purchase decisions, still made cautiously in terms of quantities, took on a more forward-looking approach. This shift aimed not only at addressing short-term needs but also included requests for coverage over a two-month period. The goal is to rebalance supplies that, due to a decrease in orders, reduced production cycles of the previous months, and high costs, had prompted a policy of maintaining very low inventories.
At present, the material supply remains ample, primarily sourced from Russia, with interesting prices, although adjusted upwards. Transportation in Central Europe continues to encounter challenges, with logistics struggling to recover from year-end delays. Additionally, a situation of mobilization in Germany is impacting road viability and inevitably affecting normal intermodal transit times.

Ductile iron

Throughout December, the ductile iron market remained stable, maintaining a balance between supply and demand that contributed to keeping prices steady. The price decline ended, prompting producers ro express the need for increased quotations. Notably, international price increases were observed alongside a growing demand. While the Italian market showed renewed interest in purchases, the precise pricing for purchase contracts remains unclear. The price gap between the European market and the US/world market persists.

Ferroalloys

Ferroalloys, especially those containing manganese, experienced a significant surge in pricing due to the critical situation in the Red Sea, causing a sharp rise in freight rates from India and China to Europe.

Italy: An overview of the ferrous scrap market

In December, despite a sluggish production pace in steel mills, the positive price trend persisted, encompassing not only high-quality materials. The constrained availability of scrap posed challenges in meeting the demands of the national steel industry. Concurrently, traders foresee further price hikes in 2024. Certain steel mills in December acknowledged the price hike to some extent, though not reaching the anticipated levels. Conversely, others, dealing with limited production schedules and/or mills remaining idle until mid-February, insisted on maintaining unchanged quotations. This dynamic contributed to a contradictory scenario, causing confusion among traders. The prevailing challenges in 2023, including the ongoing wars in Ukraine and the Middle East, coupled with a deteriorating international political landscape significantly influencing logistics (notably piracy incidents in the Red Sea/Suez Strait), have instilled notable concern among operators. This is particularly relevant in light of a downstream market that remains unresponsive or seemingly ‘dormant’.
In fact, the demand for finished goods remains subdued, compelling steel mills to scale back production while awaiting a more robust demand, particularly one willing to acknowledge the requested price hikes by manufacturers. Hence, the sentiment for January, as well as the first quarter, is marked by caution, awaiting any potential developments.

What about you, do you feel the same way about these issues?
What are your predictions for the 1st quarter of 2024 compared to what was recorded at the end of 2023?
Let us know your opinion at [email protected].