June EU shredded scrap contracts rise sharply on strong mill demand

June scrap prices across Europe rose sharply on month to record index highs for the second consecutive month, as strong demand for premium ferrous scrap grades supported prices, market participants said.

In Northern Europe, Platts’ June assessment for domestic shredded scrap was at a record high of Eur432.50/mt delivered, up on the month from Eur392.50/mt delivered in May.

Shredded scrap contracts for June settlements were largely heard ranging from Eur415-Eur450/mt delivered to the mill in Northern Europe, as prices rose steadily over the start of June, outpacing export ferrous scrap prices.

“We will keep on selling to Spain, Italy and Germany – they are also buying our export quality HMS material at better levels than Turkey,” one EU trader said.

Suppliers reiterated strong scrap demand from European mills, amid record high finished steel prices for both flat and long products.

Platts assessed TSI Northwest Europe Rebar at Eur790/mt ex-works June 4, up Eur15/mt on the week to reach the index’s highest level since July 23, 2008, when it stood at Eur815/mt ex-works. The weekly index is expected to rise further on June 11, with some market sources indicating prices well above Eur800/mt delivered.

Platts assessed Northwest European hot-rolled coil June 10 at a record high of Eur1,145mt ($1,396.50/mt) ex-works Ruhr, almost double since the beginning of the year when the index sat at Eur665/mt ex-works Ruhr Jan. 4.

“Shredded should be around Eur430-450/mt delivered for June depending on location and quality – at least Eur40/mt up on month,” a German supplier said. “We’re also expecting July to be a tight market and then we’ll see how August is – possible summer shutdowns at mills could lead to some softening in scrap prices then, but who knows?”

Limits to automotive production, owing to a sharp squeeze in semiconductor supply, have also tightened supply of high-quality ferrous scrap grades, usually sourced from automotive production and other industrial sectors.

Southern European market

In Spain and Italy, prices remained above the Northern European market for the second consecutive month. Except for January-April 2021, the Southern European shredded scrap assessment was consistently assessed higher than the Northern EU assessment since July 2017.

Platts’ assessment for Southern European shredded scrap was at Eur447.50/mt delivered for June contracts on June 10, up from Eur397.50/mt delivered in May. This meant the index also reached a new record high.

Shredded E40 scrap was offered in Spain at Eur450/mt delivered, with market sources cited Eur440/mt delivered to the mill as the minimum workable level in Italy. Some Italian suppliers cited sharply higher workable levels at Eur490-520/mt delivered for shredded scrap, reflecting tight supply and strong demand.

“Scrap prices in Italy have moved up by Eur50/mt in June, compared to a month ago, across all grades,” one Italian supplier said. “Demand is very strong and long steel producers have low raw material stocks at the moment.”

Sell-side sources cited bushelling prices as high as Eur500-530/mt delivered to the mill in Italy and Spain for June contracts, highlighting the sharp premiums enjoyed by recyclers.

Platts assessed South Europe export rebar at Eur720/mt FOB June 4, stable on week.

“There is strong rebar demand from the domestic and European market,” an Italian mill source said, citing a tradable level at Eur730/mt FOB Italy. “The seaborne market is strong although until yesterday some buyers were worried that prices could go down as Turkish producers had tried to move down scrap prices but they did not manage to do so.”

Turkish deepsea import ferrous scrap prices have hovered just under an index record high price of $515.75/mt CFR last achieved on May 25. Platts assessed Turkish imports of premium heavy melting scrap 1/2 (80:20) June 10 at $509/mt CFR, up $8/mt on week.

— Viral Shah, Annalisa Villa