Outlook: Metallics prices expected to hold firm in the near term

Metallics demand and prices picked up in December on the back of delayed restocking and seasonal supply tightening. We expect the trend upwards to continue in the short term, but m/m price movements to be thinner in comparison with the high increases of December.

In the USA, prices are expected to continue increasing. Supply will remain limited by the prolonged slowdown in traffic to scrap yards, as well as seasonal declines in automotive production and prime scrap generation. At the same time, some dealers have not been able to stockpile as they normal would for the winter months meaning restocking will continue active, which will provide support for further prices rises. Pig iron prices are also expected to trend higher in the next weeks, backed by elevated scrap prices.

A tight supply-demand balance will also provide support to prices in the European market, including Turkey, and in Asia. During winter months, both supply and demand usually slows down in these regions. However, as restocking started later than usual in 2023 Q4, we expect demand to exceed supply entering 2024 and prices will increase as a result.

In China, market expectation towards additional economic stimulus measures eased after the Central Economic Work Conference held on 12–13 December. No additional support to steel consuming sectors was signalled, and steel prices fell in the days after the conference. We expect mills will put pressure to lower scrap prices amid falling steel prices. However, the cold weather in northern China will limit scrap supply which, we believe, will offset the pressure from mills and hold scrap prices stable in the short term.

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