CAEF: SIGNIFICANT INCREASE OF SCRAP PRICES BURDENS FOUNDRY INDUSTRY
Unusual strong growth in demand for steel products has given steel mills worldwide a good economic situation at the turn of the year. In addition, the Chinese government has relaxed its import strategy for primary and secondary raw materials, which means that currently there is a considerable increase in demand for these materials on the world market.
This strong increase in demand in the scrap segment is being met by a supply side that is not yet producing or collecting at the old level, resulting in a significant volume deficit. The alternative raw material for scrap is pig iron, so that many buyers are switching to this raw material, which in turn has an effect on the price development.
As the supply side increases due to the economic situation, the price development will calm down.
The extent to which the increase in the price of CO2 allowances since this month is contributing to the increased demand for scrap as a raw material and thus keeping the price level high cannot yet be approximately assessed.
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