Steel scrap prices expected to come under pressure in Germany in Autumn

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27.08.2019 − 

The last round of price negotiations on the German ferrous scrap market could prove to be the calm before the coming storm. With supply and demand balanced, ferrous scrap dealers and steel mills were able to agree quickly to hold prices largely unchanged prices in August. "August prices were just waved through; everyone wanted to go on holiday," one merchant said summing up the mood.

At the same time, however, dark clouds were multiplying on the horizon. "You hear an enormous crunching of the gears: The economy is cooling noticeably. The mills are selling their products – especially flat steel for the automotive industry – with increasing difficulty and have to make price concessions, which causes scrap demand to fall and increases downward pressure on scrap prices," the merchant continued. But the supply of scrap from automobile manufacturing and increasingly also from machine and toolmaking had also shrunk, bolstering prices. Accordingly, sellers' willingness to accept cuts was still low at the moment.

The industry will be watching the September and October price negotiations with some anticipation, as they will signal the direction of the market for the medium term. "We must prepare ourselves for an end to the long economic peak phase and the return of harder times," said a steel scrap merchant who did not rule out sharp price reductions in the coming months.

Others expect only an economic dip, at least initially, and are warning against fear-mongering. It is also pointed out that scrap prices are currently still at a much higher level than in the economic crisis of 2008/09. "Prices are still at a generally sufficient level. Good sales channels are currently more important for ferrous scrap sellers than maintaining stable prices," one market participant said.

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The full report on the steel scrap market in Germany also appears in EUWID Recycling & Waste Management 18/2019 published on 4 September.

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