Assofermet: Scrap market stable, but uncertainty clouds outlook

Italy’s ferrous scrap market remained largely stable in May, with both demand and prices showing limited movement despite ongoing uncertainty surrounding energy costs, steel production levels and international market developments, according to the latest market report from Assofermet.

Price increases of around €15-20 per tonne recorded at the beginning of the month were gradually absorbed by the market and became firmly established across the supply chain. At the same time, scrap yards remain heavily stocked, resulting in extended delivery times at many steel mills.

Diverging expectations for June

Looking ahead, Assofermet sees growing divergence between traders and steelmakers. While scrap merchants remain hopeful of further price improvements, steel producers appear increasingly cautious and may reduce production schedules during June.

The association warns that the current stability could prove temporary. Persistently high energy costs, weak finished steel demand and broader economic uncertainty continue to weigh on the sector and could ultimately reduce scrap consumption.

Turkish market retreats from May peak

International scrap markets experienced stronger volatility during May. Turkish import prices for HMS 1/2 (80:20) scrap approached USD 415 per tonne CFR in mid-May before retreating by around USD 10-13 per tonne as demand weakened alongside finished steel markets.

European markets proved more resilient, with only limited weakness reported in Spain. In Asia, however, pressure intensified as Indian buyers faced growing competition from Chinese steel exports.

US domestic scrap prices remained largely stable. Strong steel production balanced improved seasonal scrap collection, while export prices to Turkey continued to serve as a global benchmark at around USD 405-408 per tonne CFR.

Stainless scrap market remains balanced

The stainless steel scrap market continued to move sideways during May, closely reflecting stable nickel prices on the London Metal Exchange.

According to Assofermet, the availability of imported stainless slabs has created an effective balancing mechanism. When scrap prices rise too far, slab purchases become economically attractive, limiting upward price momentum.

At the same time, scrap availability remains tight, particularly for certain stainless grades. Indian buyers have become increasingly competitive and, for some products, are offering higher prices than European consumers, strengthening India’s role as an important export destination for stainless scrap.

Pig iron demand remains weak

The market for basic pig iron remained under pressure as rising offer prices failed to stimulate demand from steelmakers and foundries.

Many steel producers continue to favor alternatives such as direct reduced iron (DRI) or scrap, while foundries have limited purchases to immediate requirements. The market is also adjusting to the disappearance of low-cost Russian pig iron supplies following EU sanctions, forcing buyers to rely on more expensive alternative sources.

Foundries struggle amid weak demand

The ductile iron market remains sluggish, with foundries operating at reduced utilization rates and facing intense competition from non-EU producers, particularly in India, China and Turkey.

Assofermet also highlights continuing uncertainty surrounding CBAM implementation, noting that differing calculation methods among importers are creating price discrepancies throughout the market.

Ferroalloys supported by defence demand

The ferroalloys market showed mixed trends during May. Bulk ferroalloys remained affected by uncertainty surrounding EU safeguard measures. Silicomanganese prices faced upward pressure due to import quota constraints, while ferrosilicon remained broadly stable amid cautious purchasing activity.

By contrast, noble ferroalloys benefited from stronger demand, particularly from the defence sector. As a result, prices remained at historically high and stable levels.

Outlook: Stability likely to continue

For the coming months, Assofermet expects only limited price movements in most scrap segments. The association believes the market is currently caught between two opposing forces: restricted scrap availability supports prices, while alternative raw materials such as slabs continue to cap significant upward movements.

As a result, market participants should expect a relatively narrow trading range unless major changes occur in steel production, energy costs or international trade conditions.

Source: Assofermet, Photo: Fotolia