Spanish scrap market: steelmakers getting ready to take up defensive position

This week Spanish plants have started recovering after a holiday price boom in the world segment of steel scrap. While most European exporters of the material, having already sold most of January production before Christmas, left the market for holidays, US traders together with Turkish mills boosted prices by another $40/t.

EU exporters, who had the material at stock, have also rushed to offer it at new levels, which has led to a temporary market oversupply. In this situation, plants have found it reasonable to suspend purchases.

In particular, while Spanish mills were getting ready to make new deals at the beginning of this week, high volumes of scrap offered by European suppliers have allowed steelmakers to back up by mid-week, making exporters revise offers.

Meanwhile, market participants report that scrap collectors are ready to sell rather large volumes of OA structural material at EUR 390/t C&F Spain, which means about $504/t C&F at the exchange rate EUR 1 = $1.295. At the same time, offers of shredded scrap are limited and traders quote it at EUR 395/t ($510/t) C&F, while a week ago it was transacted at EUR 370/t ($493/t) C&F. Estimated prices for HMS 1&2 (80:20) (E3) have also gone up and settled at about EUR 370/t ($478/t) C&F, suppliers say.

Further market developments will mainly depend on Turkish steelmakers, who are also preparing to suspend purchases after the active holiday period. If they stay calm, Spanish producers will probably follow the same strategy, hoping suppliers will cut prices. However, in any case the need to attract new quantities of the material will force mills to start negotiations by late January.

Notably, while export markets are calm, Spanish plants are purchasing scrap in the domestic market actively. Producers, having brought buying prices for local scrap to import levels, have provoked rush shipments from domestic traders. Spanish sellers are afraid of a price trend reversal and thus de-stock urgently, turning scrap into money.

Currently bids for local scrap are as follows: HMS 1&2 (80:20) (E3) – EUR 360-365/t ($466-472/t) delivered against EUR 340/t delivered last week. Prices for shredded scrap (E40) have grown to EUR 380-385/t ($479-486) delivered, by EUR 20/t up from last-week levels.
by Metal Expert LLC