European Stainless Steel Prices Experience a Decline
European stainless steel scrap prices are under downward pressure due to a combination of reduced mill production within Europe and dropping prices in key Asian export markets. According to a statement by a German trading firm, these prices might soon approach those observed during the initial phases of the Covid-19 pandemic. In 2020, at the height of the pandemic, Stainless steel scrap 304 was priced at an average of $1,140.62/t. Although the current rate is higher at just over $1,400/t, European mills are pushing for even lower prices. Moreover, there's a drive to include scrap in Europe's Critical Raw Materials Act to restrict its export outside Europe.
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The British Metals Recycling Association has indicated that the UK's steelmakers have informed the government about the existing raw material shortage, urging for a restriction on exports to the EU and other regions. Most scrapyards across Europe are still grappling with a shortage due to the slow recovery of the stainless steel industry this year. Regulatory restrictions on exports could further suppress the already dwindling prices. Dr. Gerhard Pariser of Oryx Stainless pointed out that when prices are low, the incentive to release scrap from smaller collectors diminishes, complicating the equilibrium between supply and demand.
Furthermore, a significant decline in scrap prices in India, Europe's largest export market, is affecting European sellers. Even though EU scrap exports to India witnessed a sharp rise this year, the current low prices have turned off potential sellers. Hitesh Agrawal of Prime Stainless DMCC shed light on the evolving dynamics, noting that while India's demand for scrap continues to grow, its dependency on Europe is likely to diminish due to various reasons, including the growth of India's domestic scrap industry.
Interestingly, while most of the world sees a rise in stainless steel consumption, Europe seems to be the exception. Data from WorldStainless reveals that Chinese stainless steel production grew by 8.2% in the first half of the year. India's per capita consumption of stainless steel and construction activity in the UAE also saw a significant rise. In stark contrast, European production slumped by 13.4% during the same period, underscoring the challenges faced by the region, such as high interest rates and overstocking.
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According to the article by Procurement Resource, European stainless steel scrap prices are facing a dip influenced by decreased local mill production and declining Asian market prices. Prices might soon mirror those seen at the pandemic's onset, with current rates at over $1,400/t, despite being higher than the 2020 average of $1,140.62/t.
European mills are pushing for reductions, and there's a proposal to limit scrap exports from Europe. UK steelmakers report a raw material shortage, and European scrapyards face similar challenges. Dr. Gerhard Pariser emphasizes the challenge of balancing supply and demand during low prices. The fall in India's scrap prices, a key market for Europe, compounds these issues. As global stainless steel consumption rises, Europe sees a decline, with challenges like high interest rates affecting production.
