Have scrap prices found their floor?

Despite slipping more than 25% between peak levels, in mid-May and mid-July, the time of our last update, scrap prices may have finally found their floor.

This is especially the case given an impending bounce in steel production, not least in the world’s biggest scrap markets including the EU and China that always follow the summer. Not atypically for scrap, the relatively extreme falls over recent months, especially in key imports markets such as Asia and Turkey, says as much about the extreme rises they came from than any more recent fundamental developments. In the past quarter, for example, our recently published Steel Cost Service for Q2 2016, reveals that scrap had been relatively "overvalued". To calculate this, we take into account the price of scrap as a share of steel production costs among (scrap-dependent) steel...

Published

Alistair Ramsay

September 28, 2016

00:00 GMT