European scrap suppliers lift expectations for May

Many ferrous scrap suppliers in Germany and the Benelux have lifted indicative offers to steel mills for May delivery to a minimum of €30/t above April prices, from previous indications last week that targeted a €5/t increase.

Multiple suppliers surveyed by Argus yesterday and today said they increased indicative offers to a minimum of €30/t for May delivery to mills following the sharp rise in the Turkish deep-sea import price in the past few days. Several other suppliers said they have no plans to make offers to mills today and will wait until 10-11 May to see whether the Turkish price will rise further.

A Baltic scrap supplier was heard to have sold to Turkey at close to $490/t cfr for premium HMS 1/2 80:20 yesterday. This was around $40/t higher than the Argus HMS 1/2 80:20 cfr Turkey assessment on 30 April at $449/t.

"There was a sudden change in sentiment in the market in the past few days because of higher-priced sales to Turkey. This encouraged [domestic scrap] suppliers, that 1-2 weeks ago thought €5/t up on the month is a big win, to stop offering today and hold out for a €30-40/t increase [from April levels]," one German supplier said.

Some mills in Germany and the Benelux showed resistance this morning to accept any prices higher than €20-25/t above April levels.

"Negotiations became more difficult because [the gap between] suppliers' and mills' expectations widened to €10-20/t today from just €5-10/t a week ago," another German supplier said.

Many suppliers are confident that steelmakers will accept higher prices next week as mills currently enjoy strong steel demand and prices and there is little sign that seaborne scrap prices will fall in the coming week. The higher acceptance to larger price increases from mills in neighbouring countries such as Italy further boosted suppliers' confidence to hold offers firm. At least one Italian mill was heard willing to pay €400/t for new scrap from Germany, around €40/t above April prices, as supply for this grade of scrap in Italy is still tight.

By Chi Hin Ling