Metallics prices surge to end 2023 on a high note

The CRUmpi rose by 11.1% m/m to 334.4 in December, its highest value since April 2023. Moreover, the m/m percentage increase is the highest since April 2022 – when prices surged because of the supply disruption caused by the war in Ukraine. Europe and the USA led the sharp price upswing as scrap supply tightened further in these regions due to reduced collection rates in winter months at a time when mills decided to restock.

Metallics prices rose sharply m/m as supply tightened further due to seasonal factors at a time when demand rebounded. The US scrap market led the price surge with local buyers rushing to secure supply as export bids kept rising.

In the USA, strong order books and limited availability pushed scrap prices higher m/m. A rapid increase in dry bulk freight costs (see Insight) and better demand elevated export prices, further supporting prices in the US market. Mills in key buying regions within the USA had initially entered the market offering +$50 /l.ton m/m for #1 busheling. However, robust demand and fewer supply options ultimately pushed the market up $80 /l.ton m/m. Similarly, seasonal supply tightness for shredded scrap and larger-than-anticipated buy programs raised prices by $75 /l.ton m/m.

Similar to the USA, European scrap prices rose substantially m/m as mills looked to secure material ahead of the new year while supply is limited. Mills re-entered the market to replenish inventories that have been drawn down over the past few months. Scrap availability in Europe is low because collection rates over the past couple of months were subdued due to low prices. More recently, cold weather conditions have also curbed collection and transportation of scrap.

Greater demand for trucks and higher toll rates in Germany also contributed to higher scrap prices. Meanwhile, imports are not attractive because of longer lead times and high international prices. Market participants are apparently requesting that scrap sellers reroute scrap exports to the domestic market.

In Asia, besides more restocking demand from Southeast Asia, the sharp increase in US scrap prices pushed up import prices and enabled Asian exporters to raise offer prices. Chinese domestic scrap prices also rose, by RMB50 /t m/m, as supportive macroeconomic policies stimulated speculative buying for steel and lifted steelmaking margins, leading to active scrap purchases and higher prices.

Meanwhile, pig iron prices rose m/m in all regions, driven by rising scrap prices and tightened supply. Brazilian exporters are sold out through February shipments while CIS export volumes contracted due to higher domestic consumption. Consequently, mills in the USA are judiciously utilising their pig iron stocks to manage extended lead times.