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Since the previous Mirror report, both the home and export markets for recycled steel have continued their downward price trends, reflecting the bearish sentiment among most participants. The slow demand for Turkish finished products has been a fundamental factor in the price offers being put forward for furnace-ready material by Turkey’s steel producers, who are still the world’s largest net importers of secondary raw material. This has had a negative impact on UK bulk deep-sea markets and, at the time of writing, the dockside price for HMS 80/20 material has, apart from a brief upward spurt at the end of May, slipped to a year low that is 22% below the 2023 peak recorded at the end of February. One bulk deep-sea market participant stated that these were the worst trading conditions seen since the pandemic.

On the back of the situation in Turkey, available container destinations have continued to align their prices to more favourable buying terms, with prices down 17% compared to the containerised year high reached in February. However, Pakistan and Bangladesh (Letter of Credit issues) and Indonesia (sourcing material from Japan as a preferential supplier) are currently dormant destinations as far as the UK containerised market is concerned.  

Amid these price drops, the shortage of material and limited available destinations, trading has been more difficult than in recent months. The market outlook continues to look bearish in the short to medium term, although the shortage of material may induce a correction at some point if demand strengthens. 

Economic conditions in the UK, Continental Europe and elsewhere in the world are also compounding this bearish sentiment. In the UK, there have been four hikes in the interest base rate to 5%, with predictions of more increases to follow as the government battles inflation currently pitched at 8.7%. The impact of these measures is also hitting industry and manufacturing, with the latest UK GDP reading showing that the economy shrank in May by 0.1%.

With little or no growth since 2019, economists have virtually no optimism for better days ahead in the foreseeable future. Global energy prices and inflation are still impacting suppliers and consumers alike. Trying to accommodate higher production overheads with a diminishing infeed is still a major concern for many UK metal merchants.

Although the export market remains the major outlet for recycled raw materials for the UK, which is the largest exporter within the European zone, steel mills in this country are continuing to secure all their needs, albeit at lower levels.

UK merchants are still enduring a lack of available staff, high energy costs and high inflation; although energy and inflation rates are lower than in previous months, they remain historically higher than they have been for many years. With the addition of a 15-year-high cost of borrowing, business sentiment and confidence are at best pessimistic. 

The continuing uncertainty surrounding the situation in Ukraine and world financial market/economy fears are all having an impact on sentiment at present.