In Germany and many other European countries, ferrous scrap prices delivered to the mill in February are expected to increase by at least €20-25/tonne ($23-29/t) for all grades from January levels due to strong export demand and tight supply.
It is heard that a Luxembourg mill has offered some suppliers €30-35/ton plus €20-25/ton for new scrap and lathes compared to January prices for E1 and E3 for February delivery. It has offered smaller increases for new scrap compared to old scrap, although the supply of new scrap is tighter than for old scrap as it reduced old scrap prices by around €5/tonne but did not change new scrap prices in January.
Offer indicators from some German mills are heard around €20-25/tonne higher than January prices for E2, E3, E5 and E8 plus around €30/tonne for E1 old scrap. However, a south German producer told its suppliers that it would only accept increases of 10-15€/tonne for all grades.
Most suppliers were not too keen to sell on the mills' initial indications, even with higher offers from Luxembourg. Some traders said the very tight supply means they have little material to offer and manufacturers will have to raise their bids from current benchmark levels to help suppliers increase collection. Others said the recent rise in Turkey's deep-sea import prices has prompted many scrap exporters in Germany and the Benelux to raise their port purchase prices to around or even above the producers' current offer indicators.
Argus' daily valuation of HMS 1/2 80:20 ferrous scrap prices was $500/ton yesterday, about $30-40/ton higher than the levels seen in the first half of January when European local negotiations were agreed for that month.
“It looks like Turkish prices will go higher in the coming days, so it's not impossible for exporters to pay €410-420/ton in the coming weeks,” one supplier said. "So, we're considering options as we don't have a lot of inventory."
The strong resistance of suppliers to accept increases of less than €30-40/ton from January has dampened some producers' appetite for materials for February delivery. This morning several German mills were heard telling their suppliers that they will not be making any purchases for February and will wait until March to buy scrap again.
Negotiations continued in Southern Europe as well. It is heard that Italian producers have already accepted increases between €10-30/ton compared to January levels. Some Italian suppliers said they would ask for another €10-20/ton increase in the coming days as Italian producers lowered their prices in January and many other European producers generally did not change prices.
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