European scrap prices surge on tighter availability

European scrap prices increased significantly in December as mills looked to secure supply ahead of the new year amid tight supply. Scrap prices in Europe currently range between €360 /t and €390 /t depending on the country and grade.

European scrap prices rose substantially over the past month as mills looked to secure material ahead of the new year while supply is limited. Mills have re-entered the market to replenish inventories that have been drawn down over the past few months. According to market contacts, some mills require large quantities.

Scrap availability in Europe is low because collection rates over the past couple of months were subdued due to low prices. More recently, cooler weather conditions have also curbed collection and transportation of scrap. Greater demand for trucks and higher toll rates in Germany has 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.

For similar reasons to the European scrap market, Turkish scrap import prices increased significantly to $422 /t CFR for HMS1/2 80:20 according to CRU’s latest price assessment, up $29 /t w/w, and $51 /t m/m. This has been driven by a pick-up in buying activity amid limited supply in addition to surging freight rates. See our Insight on surging freight rates here.

In Russia, domestic scrap market trend turned bearish in mid-November as steelmakers actively reduced purchasing prices. Scrap collection rates have remained healthy and have been driven by earlier elevated prices. This maintained solid supply levels and resulted in ample scrap availability, while mills have accumulated sufficient winter stocks, which only exacerbated the downwards trend. In the Central region, prices fell by more than 7% m/m while prices in the Urals and Southern regions decreased by around 8.5% m/m.

Exports in November have been active due to strong upwards price trend in the Turkish and European markets. The Russian government has extended export restrictions for scrap exports outside of the Eurasian Economic Union until 2024 H1. The volume quotas and duty rates are kept unchanged – 600kt for 6 months at the rate of 5%, but no less than €15 /t duty. Out of quota volume is charged with €290 /t.

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