European steel scrap market report

After the June meeting in Brussels, it seems that the European steel industry has finally entered the process of restructuring. The main issues are environmental issues (reducing CO2 emissions), overcapacity, competition with other materials and profitability.

Because raw materials and supplies are more expensive today than they were ten years ago and account for almost 65 percent of total manufacturing costs, not around 30. The first, third and fourth of these questions, of course, also concern scrap recyclers, who today must protect their business and are in a difficult situation.

After several years of positive profitability (five /seven years since 2002), refiners have invested in new capacities. Today, due to the prolonged economic downturn, they face higher processing costs and lower margins, which is confirmed by the result for the first half of 2014. Finally, we should not forget that the Chinese are exporting more and more steel products at very competitive prices, including to Europe.

In recent months, prices on the Italian scrap market have dropped by almost 10 euros, due to weak sales prices. There was a slight increase in the last days of the month as the refiner tried to increase their selling prices for supplies in July.

Monthly contracts with other European suppliers were settled with a price reduction of 5 euros. Regular deliveries by trucks and wagons are in accordance with contracts, but lower than usual in the summer, due to the lower price of the final product.