Further declines in local Italian scrap prices, outlook negative

Local scrap prices in Italy have fallen again, by €5-10/mt, over the past week, depending on the steel mill and the grade purchased. According to sources, trading activity is at a very low level. “We are working very little, so we can't help but accept the lower scrap prices sought by mills,” one scrap trader commented. One of the factors negatively affecting the scrap market are the long production halts planned by finished steel producers for the summer period. Most mills, in fact, have declared that they will stop production for the entire month of August, with some planning to halt production from as early as the second half of July. According to sources, this will reduce demand further and scrap prices will lose support. Another negative factor for the finished products market and consequently for the scrap market are energy costs, which are much higher in Italy than in the rest of Europe: “Energy is by far more expensive than in France or Germany and affects the margins of steel mills. This is also why the situation regarding orders and sales [of finished products] is worse here than elsewhere and why the price of scrap continues to fall, while abroad it is stable or rising slightly,” one source said. Indeed, most market participants expect scrap prices to fall further in the coming weeks.

On the other hand, the shortage of raw material is becoming more and more evident. As one trader commented,  “We deliver what is available but it is 20 percent below the normal level, mainly turnings and even more so busheling. The generation of new scrap is very low because the automotive sector is working very little.”

Prices include delivery and exclude VAT.

As regards the local scrap market in Spain, market participants report stable prices except for a decrease of €5/mt in the HMS and shredded categories. Supply and demand are balanced, according to sources, so market players do not expect any further changes before the summer holidays, which for Spanish producers will last about two weeks.

Prices include delivery and exclude VAT.