Southern Europe shredded scrap prices jump sharply for April contracts

April ferrous scrap prices across Europe rose sharply on month, as domestic mills raised price to match the export market as the benchmark Turkish import scrap market remained firm, sources said April 11.

The Russian invasion of Ukraine and the subsequent supply shortage of key steel raw materials from the Black Sea region has seen prices for ferrous scrap and long steel products in Europe rise sharply.

The Platts assessment for Southern European shredded scrap on April 11, as reported by S&P Global Commodity Insights, was at Eur585/mt delivered to the mill for April, up sharply from Eur512.50/mt delivered in March. Workable levels were largely heard between Eur580-590/mt delivered to the mill.

"Italy and Spain prices are now definitively stronger as they booked less [scrap volume] in March," an EU trader said, citing Eur585-590/mt delivered as workable for shredded scrap into Italy.

European scrap contracts for April were heard to have been closed at prices Eur45-70/mt up month on month, depending on the mill and the previously agreed level for March.

"Demand has slowed down as no one wants to have the risk to have such expensive stock," an Italian mill source said. "Prices jumped for both raw materials and finished products and there is the sentiment that prices will stay now at these latest levels -- it is not clear if or when they will go down will tumble or will gradually decrease."

Some Italian scrap dealers were seeking Eur620/mt delivered for E40 shredded scrap, but mills were reluctant to accept these levels, with as high as Eur590/mt delivered already booked.

Italian steelmakers were heard to work at a lower capacity utilization amid the high raw material and energy costs, in order to maintain their margins. Domestic Italian rebar prices were heard around Eur1,200/mt EXW.

The S&P Global Eurozone Construction Total Activity Index dropped to 52.8 in March, from 56.3 in February, pointing to the slowest expansion in overall Eurozone construction activity since October 2021. An index figure above 50 suggests an increase in activity month on month.

"Firms across the sector noted that rising costs and material shortages weighed increasingly on sector performance at the end of the first quarter," Usamah Bhatti, economist at S&P Global, said. "Notably, input costs continued to rise at a substantial pace amid increasingly severe supply chain delays. These lingering issues weighed heavily on business sentiment, with eurozone construction companies reporting pessimism regarding the year ahead outlook for activity for the first time in 15 months."

Northern EU scrap market catches up to export pricing

In Northern Europe, Platts' April assessment for domestic shredded scrap was at Eur570/mt delivered April 11, up sharply from Eur525/mt in March.

Market sources cited shredded contracts largely between Eur560-580/mt delivered, with some bullish recyclers targeting as high as Eur595/mt delivered to the mill, although the level was not heard to be achieved.

"Domestic mills have raised prices by Eur15-45/mt so shred is up to Eur560-580/mt delivered, and E1 is up to Eur520-540/mt delivered, so why should we sell to Turkey at lower levels as long as we have enough demand?" a German recycler said.

Buyers in Turkey, the main export market for Northern European scrap recyclers, have been largely holding back from purchasing deepsea bulk cargoes, in search of softer prices.

Platts assessed Turkish imports of premium heavy melting scrap 1/2 (80:20) April 11 at $650/mt CFR, unchanged from one month earlier on March 10, but down from an all-time assessment high of $665/mt CFR on March 16.

In April, the Platts Northern Europe domestic shredded scrap index was at $619.76/mt delivered in US dollar terms, while the Platts shredded scrap bulk export Rotterdam index was at $636/mt FOB April 8. This meant a spread of $16.24/mt, narrowing from $29.04/mt in March, as domestic mills still lagged behind firm export pricing.