Shane Mellor, managing director of Mellor Metals, warned that the home and export markets for recycled metal have seen prices dip recently, as a result of Turkish finished product prices falling.
Turkey is one of the largest importers of UK recycled metal, but the price of finished product there has been falling in recent months which means the price they are willing to pay for scrap also falls.
This echoes what many other ferrous recyclers have been saying in recent weeks, as the aftermath of the earthquake in the south of the country and uncertainty from the Turkish election also take hold.
Markets
Mr Mellor said the fall in Turkish finished product prices has “reverberated around the recycled metal markets as consumers seek lower-priced raw feed”.
He also stated that the deep-sea bulk market “seems to have been the forerunner, dropping by around 20% in the last few days, with UK consumers and container destinations aligning their prices to more favourable terms (down around 12%)”.
He tipped the market to remain “bearish” in the short to medium term, although the shortage of material “will be pivotal to a correction at some point”.
Domestic
Mr Mellor added that UK steel mills are continuing to secure all their domestic recycled raw material needs, albeit at lower levels. However, the export market remains the major outlet for recycled raw materials in the UK, the largest exporter by country within the European zone.
Along with material shortages, UK merchants are continuing to endure a lack of available staff as well as high energy and inflationary costs.
The continuing uncertainty surrounding the situation in Ukraine, elevated energy/labour costs and fears over the global economy and financial markets are all having an impact on sentiment.
Turkey
The falling Turkish demand was also noted by Mogens Bach Christensen of Danish firm H.J.Hansen Genvindingsindustri A/S.
In his report, he said the impact of inflation and interest rates are being felt, and this is made worse by the Turkish situation.
“The logic is simple: if heating costs rise as strongly as was the case in 2022, then replacing the family car will be postponed and its life will therefore be extended; and when the business environment is uncertain, industrial investments are shelved accordingly.
“[Turkish] prices have been on a downtrend, driven primarily by falling demand for finished steel. The Indian market for recycled steel has been relatively stable over the last year, generally being considerably less volatile than is the case for Turkey; recently, however, Indian prices have also followed a downward trend.”
US recycled steel dealers enjoyed a surprisingly robust first quarter
- George Adams, SA Recycling (USA)
Global
Elsewhere, a report from George Adams of SA Recycling (USA) and fellow BIR board member, said that US recycled steel dealers and steel mills “enjoyed a surprisingly robust first quarter to 2023”.
He said: “Although this year’s first quarter was slow to develop, it started to become clear by February that orders for new steel were exceeding anticipated demand. That set off a chain reaction of steadily rising new steel prices and, in a market of low recycled steel supplies, of upward pressure on recycled steel prices.”
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