EU scrap contract prices firm in strong finished steel market

Scrap prices across Europe remained strong as of April 9, as European mills were expected to accept largely unchanged levels on month following a recent rebound in the international scrap market, market participants said.

Demand for finished steel, including rebar, across Europe was heard to be strong, driven by seasonal factors as well as restarted infrastructure projects, sources said.

In Northern Europe, Platts’ April assessment for Northern European domestic shredded scrap was Eur357.50-362.50/mt delivered, down slightly on month from Eur365-370/mt delivered in March.

“There is a strong undersupply for bushelling and prime grades in general and alternatives like HBI [hot briquetted iron] and pig iron are not so price-competitive, so mills have to make do with more shredded scrap, so there’s higher demand than last month for shred,” an EU recycler said. “Even obsolete grade prices won’t tumble, so I can see a monthly rollover to a small drop.”

Contract negotiations between recyclers and Northern European mills were heard to be ongoing amid the shorter working week following the Easter holidays across Europe.

A second Northern EU recycler said shredded scrap deals agreed at the beginning of April were done as low as Eur340/mt delivered, with later deals heard up to Eur365/mt delivered.

“Less than 50% of contracts have been agreed and suppliers are now targeting a rollover [relative to March prices],” the second recycler said.

Platts assessed the benchmark Turkish import market for premium heavy melting scrap 1/2 (80:20) at $431/mt CFR on April 9, up from a recent low of $415/mt CFR on March 24, but down on month from $449.50/mt CFR on March 10.

Platts assessed Northwest European hot-rolled coil April 9 at Eur905/mt ex-works Ruhr, up sharply from Eur752/mt ex-works one month earlier on March 10. A major European producer announced another price increase to Eur920/mt, with sources suggesting that prices are nearing a ceiling.

Platts assessed TSI Northwest Europe Rebar at Eur620/mt ex-works April 9, down from Eur630/mt one month earlier on March 12. Market sources said long steel sentiment was positive, but attributed lower domestic mill rebar offer prices to lower intra-month scrap deals booked by mills, as well as the beginning of the new EU import safeguard quota period started April 1.

The EU import safeguard quota for Turkish-origin rebar over the April-June quarter was being filled up rapidly. Approximately 21,527.59 mt remained available, as of April 9, of the total quota of 59,480.38 mt.

In Spain and Italy, prices remained behind the Northern European market, but the spread between the two regions continued to narrow on month. Prior to January 2021, the Southern European shredded scrap assessment was consistently assessed higher than the Northern EU assessment up to July 2017.

Platts’ assessment for Southern European shredded scrap was at Eur355-Eur360/mt delivered for April contracts on April 9, up from Eur350-Eur355/mt delivered in March. This meant April contracts matched the all-time index high in January 2011.

“HBI [understood to be ex-North Africa] has been sold into Italy at $440/mt CFR, and so it makes more sense indeed to pay for high quality scrap instead,” an Italian trader said. Higher quality ex-CIS HBI was heard to be tradable closer to $480-$500/mt CFR.

Shredded E40 scrap prices in Italy were heard to be firm at Eur360/mt delivered, with prices for the same grade in Spain heard at Eur355/mt delivered.

“There were some expectations of a little correction in the domestic scrap prices but prices in the end stayed firm, and they are expected to go even higher as demand is reported strong,” a Spanish scrap dealer said.

Scrap prices in Southern Europe were expected to remain largely stable in early April, before likely being driven up by the good local demand and activity in the benchmark Turkish import scrap market, one Italian mill source said.

“Demand in Europe of scrap is good, while supply is low. We see good demand of long products from the Far East, because Chinese mills are not offering and Turkish mills are already trying to take advantage of this, which will drive fresh enquiries of scrap in a market that is already tight,” the Italian mill source said.

Italian export rebar offers were heard around Eur550/mt FOB, but some mills were holding back from offering, having filled order books in recent weeks.

End-user sentiment was more optimistic, as data from the construction industry, the main end-use sector for scrap-consuming long steel producers, was more positive, as underlined by the latest IHS Markit Eurozone Construction PMI. IHS Markit is subject to a merger with S&P Global pending regulatory approval.

The Eurozone Construction total activity Index signaled the first monthly increase in output since February 2020, totaling 50.1 in March, up from 45.0 in February, “signifying a fractional expansion in eurozone construction activity,” IHS Markit said. An index figure below 50 suggests a fall in activity month on month.

— Viral Shah, Annalisa Villa