EU mills’ June indications for scrap exceed expectation

Many European mills in Germany, France and Benelux today began to give demand and price indications for scrap delivery in June that far exceed suppliers' initial expectations of around €10-20/t up from May prices, significantly boosting suppliers' sentiment.

A large steel group was heard to have given indications for its mills in France at €30/t above May prices, while suppliers sought a month-on-month rise of €50/t. Suppliers were heard to have offered material at €55/t up from May levels to another large steel group's mills in France.

Initial offers to Luxembourg were heard at €40/t up on the month for obsolete grade scrap and €60/t up for new scrap.

German suppliers now widely expect mills to accept a minimum of €40/t up on the month for E1 old scrap and €50/t up for new scrap. Demand for bushelling is strong and supply is tight because of lower output from many carmakers in Germany. Some suppliers are confident that they can sell bushelling in June at prices €50-60/t higher than May levels.

Offers for German new scrap to Italy were heard around €485/t delivered for E8 and €500/t for E8 with special requirement. Italian mills were yesterday heard to be paying around €425/t for HMS 1, €425-430/t for bushelling and €440/t for E8 with specification close to foundry grade.

Several suppliers said they raised target prices by at least €20-30/t today after receiving mills' indicative demand and prices this morning. Demand, particularly for new scrap, was much stronger than they initially estimated and many of them have very limited stock of this scrap grade available because of reduced scrap generation from carmakers. And most suppliers are confident that they will be able to achieve their target prices in June.

A month-on-month increase of €40/t in E1 prices will put the average price for this grade in Germany and Benelux at around €400/t delivered to mill, which is only $10-15/t below today's Turkish deep-sea import price for premium HMS 1/2 80:20 and €50/t above today's delivered to dock prices for HMS 1/2 in the Netherlands and Belgium.

By Chi Hin Ling