Over the past week, the local Italian scrap market has declined bringing prices back to the levels of late April-early May. According to some market participants, it is too early to speak of a downtrend, but steel mills are aiming for lower prices.
The reductions in scrap purchase prices that Italian mills had implemented last week materialized in the last days of May, resulting in a €5-15/mt drop in local scrap prices. Quotations have thus returned to the levels of a month ago, prior to the last round of increases. According to a steel mill official, “There would be the conditions for a major drop and in a normal historical moment the scrap price would fall consistently. Instead, we only get minor changes because of the shortage of scrap’. To cope with this critical situation and to further cool the local market, many steel mills are slowing down purchases in the local and European markets by importing raw material from the US and South America. “There are several ships coming in. We are struggling to produce. We couldn't go on like this,” said one source, adding that they will most likely come out with even lower purchase prices, stating, “There is supply but we are waiting to conclude purchases locally because prices will probably go down again’.
Although steel mills are talking about long stops and major production slowdowns between July and August, some traders are more inclined to think that prices will stabilize. One market participant believes that these are mostly threats as there is no longer the government support to cut the costs of a production halt, adding, “Steel mills will not halt production. They will continue to work at reduced capacity and therefore will continue to need scrap supplies.” Another market participant agreed and added that the scarcity of available scrap will not allow major reductions. According to one source, moreover, “It is difficult to pass on mills’ reductions in collection prices because there is little margin.”
Quality |
Average spot price (€/mt) |
Average spot price (€/mt) |
Turnings (E5) |
325-335 |
340-345 |
HMS (E3) |
345-360 |
360-375 |
Shredded scrap (E40) |
385-395 |
390-400 |
Busheling (E8) |
380-390 |
390-400 |
Prices include delivery and exclude VAT.
With regard to the Spanish scrap market, several sources stated that steel mills in the north of the country are trying to lower their scrap purchase prices by about €10/mt. According to market participants, however, there are no market conditions for an effective decrease as scrap flows are low. Local scrap prices are therefore expected to remain unchanged in the coming weeks.
Quality |
Average spot price (€/mt) |
Average spot price (€/mt) |
Turnings (E5) |
325-330 |
325-330 |
Old steel scrap (E1) |
345-350 |
345-350 |
HMS (E3) |
370-375 |
370-375 |
Shredded scrap (E40) |
380-385 |
380-385 |
Prices include delivery and exclude VAT.