The actions taken by Groupe Ecore Holdings during the COVID-19 pandemic and a revival in the ferrous scrap market have helped it earn a B- rating and a stable outlook from Fitch.
The rating agency removed the French recycler from its Rating Watch Negative (RWN) zone after affirming its latest Long-term Issuer Default (IDR) rating. Fitch cited Ecore’s “disciplined approach to securing minimum margins,” improving scrap prices due to strong demand from Southeast Asia, and a revival in business activity in September as some of the key drivers for the change in ratings.
Weak demand in the European steel sector, owing to the pandemic, impacted Ecore’s volumes throughout the first two quarters of this year. Site closures in France during Q2 and part of Q3 2020 further affected collection during the year, according to Fitch, with the total scrap volumes at the company declining by 22.5pc in the first nine months of 2020 compared with the same period last year.
A recovery in the European scrap market has further strengthened Ecore’s business position this year, Fitch indicated. A strong rebound in finished steel in the Asian markets has been driving global ferrous scrap prices since late August. Moreover, European steel mills that had reduced their scrap inventory in H1 2020 have begun restocking. The rating agency estimated that these factors have led to scrap prices delivered France to increase to €244/mt in September compared with €197/mt in April this year.
Ecore is the second-largest ferrous metals recycling company in France after Derichebourg.