A decline in scrap metal prices: almost all major factories have reduced prices by 500 rubles or more. Currently, prices in central Russia are nearing 22,000 rubles ($215) per ton for 3A-grade scrap, while prices in Western Siberia range between 19,200 and 19,800 rubles ($187-193) per ton. What is driving this price drop?
Despite ongoing sanctions, Russia’s steel industry remains heavily dependent on export markets. Exporting semi-finished products to foreign countries is essential, and this reliance is unlikely to change in the coming years.
A notable transaction last week saw Russian Translom sell 30,000 tons of 95/5 scrap to Turkish Yesilyurt at $339/t.
Further price reductions in winter may reduce the available scrap supply, as suppliers hold back material until spring. At the same time, using scrap as a substitute for pig iron is cost-effective for integrated steel plants.
Pig iron production has declined by 6%, but iron ore production has only dropped by 1%. Exports of ore are minimally affected by sanctions, with strong demand from China. This dynamic allows producers to sell more ore without restrictions and use cheaper scrap to replace the missing pig iron volume.
With February approaching and heavy snowfall already impacting logistics, the supply of scrap metal remains tight.
$1 = RUB 102.49
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