Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

Davis Index’s monthly German ferrous consumer scrap indices declined by €3-7/mt ($3-8/mt), depending on grade and location, following the conclusion of mill-yard negotiations in June.


The German domestic steel industry is unable to gauge the recovery timeline for steel consumption despite the country’s economy faring better than its European counterparts, given the relatively limited impact from COVID-19.


One German steel mill’s facilities were still operating at approximately 45-50pc capacity utilization, Davis Index learned, due to the diminution of its steel order books, with no foresight yet on the June and July production schedules. A German mill scrap buyer also noted that if domestic steel consumption remains equally impoverished into July then the company would likely have to take the difficult decision to idle its steelworks for up to four weeks.


There appears to be only one bright spot, relatively speaking, for the German steel industry with the construction PMI rebounding from record lows of 31.9 in April to 40.1 in May, with the downturn remaining less severe than in either manufacturing and services sectors.


Domestic construction activity and demand for long steel products have fared better, compared with the flat steel market, but German mills surveyed by Davis Index were in unison on holding lean or little-to-no steel inventories to free up liquidity.


Davis Index also heard anecdotal evidence that ArcelorMittal’s German or neighboring facilities, particularly in Ghent, Luxembourg, Bremen, and Hamburg, had gone from price setters to price takers, because of its significantly reduced scrap purchasing activity.


ArcelorMittal’s ferrous scrap purchase volumes have declined so much so that the company had to increase June purchase prices for some of its German facilities by up to €10/mt to realign its levels with the rest of the market.


North, east, south and west German obsolete ferrous scrap grades of Sorte 1 (E1) dropped by €3-9/mt to €183-203/mt, Sorte 3 (E3) declined by €3-10/mt to €194-223/mt, and Sorte 4 (E40) fell by €3-10/mt to €197-228/mt.


Davis Index’s new monthly low residual ferrous scrap indices for north, east, and west German Sorte 2 (E2) and Sorte 8 (E8) decreased by €3-7/mt and €2-6/mt to €208-217/mt delivered to mill and €213-229/mt delivered, respectively. 


In southern Germany, new low residual ferrous scrap indices were either unchanged at €203/mt (E2) and €206/mt (E8) in June.


(€1 = $1.13)

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