Slow start to 2024 for global scrap market

The CRUmpi declined by 1.1% m/m to 330.7 in January, compared to a 5.5% m/m increase in January 2023.  Metallics prices typically rise in January due to tighter supply of both prime and obsolete grades of scrap. However, steady automotive production and a milder winter thus far in most major supply markets resulted in greater availability of scrap. Moreover, seaborne pig iron supply rose due to higher export allocation by Brazil and Ukraine. Particularly, Ukrainian export capacity increased due to greater access to temporary sea corridors. 

The metallics market started 2024 with prices flat-to-down in most regions as demand weakened while supply was seasonally better due to various factors. Prices in Asia started the year on a stronger footing than in the west.

In the USA, a price tug-of-war between mills and dealers left the market in limbo for several days and kept prices unsettled for several regions at the time of writing. Steelmakers in Detroit and Midwest had initially entered the market with bids lower m/m for both prime and secondary grades, but dealers were pushing to keep prices flat. Ultimately, scrap dealers in some regions agreed to reduce prices m/m across grades, albeit to a lesser degree than initially suggested. Demand is robust in the US market, but supply has been seasonally better due to a mild winter so far.

Meanwhile, in Europe, scrap market participants cited weak demand as buyers and sellers were slowly returning to business from the holidays. Domestic scrap prices fell slightly m/m in Italy, but seller’s intentions were to raise prices by €5–10 /t over upcoming weeks, given the recent upward momentum observed in finished steel prices and restricted supply availability. It remains to be seen if higher prices will be accepted by the market as many buyers restocked ahead of the new year and steel end-use demand did not significantly pick up.

Some Asian markets were outliers to the general flat-to-down trend for scrap prices. Prices rose m/m in South Korea and China due to mills’ restocking purchase while stayed unchanged in Southeast Asia and Japan due to relatively low market activity. EAF-based mills in China restocked their scrap requirements early, anticipating reduced availability from late January as processing and collection rates usually drop ahead of the Chinese New Year holidays, starting on 9 February this year. Mills in Japan and Southeast Asia were not keen on stocking up scrap as they have been struggling to liquidate high finished steel inventories in a slowing market.

Meanwhile, pig iron prices rose m/m in all major regions aside from Europe on improved buying. Demand in the USA was robust while market participants reported that availability of Brazilian material increased after tightening a month prior. Meanwhile, Ukrainian export capacity increased due to improved access to temporary sea corridors. European buyers were slow to return from the holidays, while they will have access to less Russian supply as the new EU sanctions package, which includes restrictions on pig iron imports, started in December.

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