The typical summer lull in the German ferrous scrap market has arrived earlier this year and could last longer than usual. The scrap traders contacted for the monthly EUWID survey paint a sobering picture of the steel market. Order intake at steel mills has recently declined further and production is being curtailed, market participants say. Accordingly, there is low demand for scrap, which was only being purchased with significant price cuts in June.
Due to the upcoming summer holiday season, when steel mills often shut down for annual maintenance, demand for scrap in July is likely to slide again. Moreover, steel producers are reluctant to hold inventories because of the tense liquidity situation. For merchants, a collapse in sales volumes would be far more problematic than the anticipated price drop.
"We are only hearing negative news,” commented one trader. Producers of concrete reinforcing steel (rebar) in particular "have their backs to the wall”. Barely any steel was being delivered and the production output was being put into storage. For these reasons, mills were absolutely unwilling to compromise on scrap prices, market participants told EUWID.
Since the slump in steel scrap demand in Germany and neighbouring countries has been even more pronounced than the decrease in supply, prices were under strong pressure in June. Even larger markdowns were avoided only by good export sales to Turkey and Asia at the beginning of the month.
Read the complete monthly report on the steel scrap market in Germany and access price tables and graphing tools here: