European steelmakers lift July scrap price expectations

Some European steel mills were heard to have increased their price expectations for scrap price negotiations in July by about €20/t ($20.6/t) in the past two days, following a sharp rebound in Turkish deep-sea import prices in the previous two weeks.

A large Luxembourg-based steelmaker was heard to have lifted its bid indications to minus €80/t from June levels of minus €100/t. Several other Benelux mills were heard to have made similar adjustments, while one Italian mill was heard to have kept its bid indications at €100/t down from June prices.

But most scrap suppliers surveyed by Argus over the past two days said that they expect further increases as current bid indications from mills do not fully reflect the recent sharp rebound in Turkish import prices. The Argus daily cfr Turkey assessment for premium HMS 1/2 80:20 rose to $378/t on 4 July, up $58/t from $320/t on 20 June.

"The Turkish price in mid-June, when we finalised our June contracts, was about $370-380/t, so a fair price for July [domestic] contracts should be unchanged from June levels," one supplier said.

But most suppliers admitted that at this stage it is almost impossible for mills to accept unchanged prices in July negotiations. They would be willing to open official negotiations at around minus €40-50/t from June levels, based on the current delivered to dock bids at the export market.

Argus assessed HMS 1/2 delivered to Amsterdam-Rotterdam-Antwerp-Ghent at €240-250/t on 28 June. But this assessment is set to rise this week as several exporters have increased their bids to €265-280/t.

The Argus monthly national average delivered to mill assessments for E1 old scrap and E40 shredded scrap in Germany were €328.12-338.12/t and €374.71-384.71/t respectively in June.

Many European mills have already said that they have no intention of mirroring the price movements in the seaborne market because they do not require large volumes of material. Most mills will demand no more than 50pc of their typical consumption in July because of slower steel demand expectations, planned maintenance and higher energy costs. Some mills may even stay out of the market this month.

Most official negotiations are not expected to begin until the end of this week or early next week. Bid and offer indications from mills and suppliers may be subject to large movements between now and then as the Turkish deep-sea import market continues to search for the next sustainable price level, which some participants suggest may be much closer to $400/t cfr for premium HMS 1/2 80:20.

By Chi Hin Ling