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Scrap prices under pressure as mills forced into production cuts

In light of an expected recession in Europe, the continent’s stainless steel producers are becoming increasingly worried about demand for their products over the coming months.

This is a challenge faced by most industries, to which we can add the influence of a record level of imports of finished goods, particularly in the stainless steel sector. As a result, sales prices for stainless steel have fallen rapidly - in fact, faster than ever before.

At the same time, it should be stressed that stainless steel is extremely eco-friendly, at least in Europe where it is produced using largely stainless steel scrap in electric arc furnaces. This requires electricity as well as gas, both of which have been subject to extreme price hikes as a result of the conflict in Ukraine.

Among producers, we are currently witnessing one of the lowest capacity utilisation rates ever and it is hard to believe that this will change any time soon. As a result, both demand and prices for stainless scrap remain very low. On top of this, the ferro-chrome benchmark price has collapsed more than 17% to US$ 1.49 per lb.