The UK market for deliveries of steel scrap to domestic consumers has increased in August, more than paring losses made in July as tighter supplies and firmer demand at home and abroad combined to push up prices, industry sources told Fastmarkets.
The United Kingdom’s domestic market for steel scrap gained strength in August, with tighter supply and firmer demand at home and abroad combining to push up prices, industry sources told Fastmarkets.
*** UK steel producers
UK steel producers have been resigned to higher monthly prices in August as a result of the lockdown imposed to contain the spread of Covid-19 in recent months, which resulted in a slump in scrap generation arising from fewer demolition projects in the construction sector. White goods and car scrappage is also down.
Moreover, there has been steady demand among traditional importers of scrap from Europe, such as Turkey and the Indian subcontinent, as well as European importers from the UK, such as Spain, British scrap sources said.
“We went up £۱۵ ($۱۹٫۶۰) per tonne for our August scrap purchases and we were pushed as high as £۲۰ per tonne by suppliers, but we resisted that increase,” a major consumer source told Fastmarkets. “Steel scrap availability is tighter this month and steelmakers are all looking for scrap, especially [major UK steelmaker] Celsa. A monthly move higher of £۱۵ per tonne was the minimum, we think.”
Officials at Celsa could not be reached for comment, although UK-based scrap traders viewed the market in the same way, adding that persistent export demand together with a likely run in tight scrap supply conditions in the UK would at least support domestic prices, if not push them further upward, in the coming weeks.
“Shredded scrap supply is very tight due to the UK economy operating at about 40-45% of its usual level, so a lot less scrap is being generated from supply areas such as car scrappage and as a result of demolition projects in the construction sector,” a UK scrap trader said.
*** light iron market
A £۵-per-tonne increase in the light iron market followed a corresponding rise in monthly delivery settlements to consumers for August business, with contract prices for the month assessed £۱۵ per tonne higher on most grades apart from borings, which increased by £۱۰ per tonne.
“You have to fight hard for steel scrap supply, even for small parcels; there is tighter scrap generation,” another scrap trader said. “Against that there is fairly firm demand now for domestic supply, and the British export market into Turkey and India is steady.”
“UK exporters have good orders for heavy melting scrap 1&2 from buyers in Turkey and elsewhere… up by £۱۵ per tonne from last month,” a source in England said. “UK steelworks will have to pay very close to that in order to secure sufficient tonnages.”
Still, not all feedback suggested there were steel scrap price increases in the UK as much as most had reported.
One major supplier source said:” Domestic works have generally settled at plus £۱۰ per tonne, but foundry prices are holding [their prices because] there have very little or no demand. There has been a lull in demand from the South Wales steelmakers, while the Northern [England] steelmakers are buying a reasonable tonnage for August, particularly since one of those steelworks has a summer shutdown at the moment.”
Buying prices at UK export terminals have also increased by £۱۰ per tonne for basic grades, with a $30-per-tonne increase from Turkey in recent weeks mostly “nibbled away by the weakness of the US dollar,” the major supplier source added.
“The Turks have currently withdrawn from the import market mostly due to too many cargoes being offered from the United States and Europe,” the source said.
*** price assessment for steel scrap
Fastmarkets’ price assessment for steel scrap, 1&2 old steel, domestic, delivered consumer UK was £۱۰۵-۱۲۰ per tonne on August 14, up by £۱۵ per tonne from £۹۰-۱۰۵ per tonne on July 14.
The price assessment for steel scrap, OA plate and structural (P&S), domestic, delivered consumer UK on the same day was £۱۲۵-۱۴۰ per tonne, also up by £۱۵ per tonne from £۱۱۰-۱۲۵ per tonne a month earlier.
UK scrap industry sources also reported price increases across the European continent for August-delivery settlements to consumers. The German and Spanish markets have both shown increases of €۱۰-۱۵ ($۱۲-۱۸) per tonne during the month, reversing the losses seen in July.
In terms of markets for steel scrap exports from Europe, prices for cargoes sold to Turkey have been strengthening steadily since July 14 when the UK monthly consumer markets were last settled. But that market has been relatively steady over the past week.
*** Index for steel scrap, HMS 1&2 (80:20 mix) and shredded scrap
Fastmarkets’ daily index for steel scrap, HMS 1&2 (80:20 mix), North Europe origin, cfr Turkey was calculated at $276.12 per tonne on August 14, down slightly from $277.73 per tonne a week earlier but up by nearly $25 per tonne from $251.51 per tonne a month earlier on July 14.
Turkey’s crude steel in the first six months of 2020 fell from a year earlier but its consumption of steel end-products rose over the same period. The Turkish Steel Producers’ Association said this demonstrated the effect of increased imports on domestic crude steel production in the country.
The corresponding weekly calculation of the steel scrap, shredded, index, import, cfr Nhava Sheva, India was $309.64 per tonne on last Friday, up by $5.46 per tonne from $304.18 per tonne a week before.
*** Exchange rate for the UK’s pound
With international scrap markets trading in dollars, the exchange rate for the UK’s pound sterling versus the US dollar has a major effect on the UK’s steel exports. A stronger pound sterling value makes UK scrap more expensive buyers outside the UK who pay in dollars.
The exchange rate was $1.31 to £۱ on August 16, compared with $1.26 to £۱ on July 14, according to exchange rate website Oanda.com. The pound was at a year-to-date low of $1.19 to £۱ on March 19.
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