Steel scrap suppliers resist calls for lower prices in Germany

Scrap merchants' margins are under pressure, both
on the purchasing and on the sales side
21.10.2020 − 

Negotiations between scrap suppliers and steel mills in Germany were protracted in October and were eventually concluded as the second full week of the month drew to a close. Steel mills were pushing for price cuts amidst reduced scrap exports. Merchants were not on board with such plans, citing still rather strained scrap supply and little leeway for negotiations on the purchasing side. At the end of the day, most prices stayed the same with minor adjustments upward – and in a few cases downward, depending on the specific price paid by that mill in September.

Scrap merchants are feeling the effects of their "sandwich position” between steel producers and consumers particularly keenly at the moment. "Both are using every means at their disposal to widen margins,” one merchant said. "Steel mills definitely want to lower scrap purchasing costs despite rising steel prices in an effort to offset a portion of the losses incurred so far in 2020.”

On the other hand, big automotive groups are reportedly exerting major pressure on prices charged by their suppliers and playing them off against one another. "The way that some OEMs are dealing with suppliers - our customers - is beneath contempt at times,” sources said, not mincing their words when criticising current market developments that had already led to a few companies, mainly foundries, going bankrupt.

Automotive sector picking up speed as
aircraft and shipbuilding remain subdued

Recent trends in new steel scrap arisings are raising hopes that the year might end on a good note. Production has increased again in the automotive sector, in particular, with post-industrial scrap generation on the rise. However, recyclers noted that mechanical engineering firms, the aircraft sector and shipbuilders continued to have a really hard time of it and had thin order books. Scrap recyclers and merchants are thus still operating at widely varying rates, depending on their individual regional customer base. Descriptions of their own business range dramatically from "abysmal” to "our inventories are full again”, depending on the respondent in question.

The full report on the ferrous scrap market in Germany will appear in the next print and e-paper issues of EUWID Recycling & Waste Management (22/2020) out on 28 October. Online subscribers can access the report immediately here: Steel scrap Germany

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