Steel scrap prices on the German market yielded significantly in October. The industry continues to contend with low ore prices, which allow integrated steel mills can produce even rebar much more cheaply than electric arc furnace mills, which use scrap as their sole feedstock. At the same time, integrated mills are reducing their scrap consumption to the technical minimum, which they can often cover using revert scrap.
Surplus capacity in China is another problem facing the industry. Excess production means that Chinese semi-finished steel products are entering the global market in the form of billets and competing with regional steel manufacturers. Sources noted that companies in the Turkey, Italy and the UK were now buying these products.
Some have considered such reports to be only rumours. However, the amount of surplus capacity in China and low transportation costs make this scenario at least probable. At the same time, though, Chinese companies are apparently now buying scrap in Europe.