Uncertainty hampers longer-trade scrap deals

The gloomy economic output is driving aluminium and steel scrap traders to shorter-term buying, according to analysis by FastMarkets.

The energy crisis is seen as a major cause although rising interest rates, material shortages and weakness in the key automotive and construction sectors are all factors.

‘Initial overstocking after Russia’s war in Ukraine erupted in February, coupled with shrinking end-user demand, pushed prices down for steel and aluminium products in the ensuing months,’ the FastMarkets report says . ‘European mills then had to significantly cut production to balance supply and demand.’

Uncertainty over future consumption has made longer-term forecasting difficult, traders told its reporters leading to limited, short-term buying.

Construction market specialists says growth in the construction sector of 3% in 2022 is predicted be just 0.2% in 2023, 0% in 2024 with recovery not expected until 2025.

Eurofer adds that automotive output is expected to have fallen 1.7% overall last year because of supply-chain disruptions and the war in Ukraine, believing that such downside factors would persist at least until the second quarter of 2023.