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Key takeaways:
In the latest short episode of the Fast Forward podcast, Alex Kershaw, Senior analyst for steel, raw materials and ferrous scrap at Fastmarkets, steps back from short-term volatility to unpack the forces shaping global scrap steel markets.
The discussion highlights a key tension: prices are rising, but the drivers behind that strength are not rooted in demand fundamentals.
Across regions, the market is being supported by cost pressures, from energy and freight to raw material inputs, rather than a sustained recovery in steel consumption. This creates a fragile pricing environment, where upside is constrained and downside risks are building.
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The escalation of conflict in the Middle East has played a central role in reshaping scrap markets. Higher oil and bunker fuel prices have lifted global freight costs, increasing the landed price of scrap in major import markets such as Turkey, India and Southeast Asia.
At the same time, elevated energy prices are feeding through into steel production costs, supporting finished steel prices and indirectly lending support to scrap. However, this support stems largely from mills attempting to preserve margins rather than from any meaningful pickup in consumption.
This dynamic creates a disconnect: prices are rising, but the underlying demand signals remain weak. As a result, current price levels are vulnerable to reversal once cost pressures ease or supply increases.
Not all segments of the scrap market are moving in the same direction. A clear divergence is emerging between prime and obsolete grades, particularly in the United States.
Prime scrap has found relative support, underpinned by stronger flat steel production and continued capacity expansion at mills designed to consume higher-grade inputs.
In contrast, obsolete grades are facing increasing pressure. Seasonal collection trends are boosting supply, while subdued export demand, especially from Turkey, is leaving more material within domestic markets.
This widening gap between scrap categories reflects a broader structural shift in steelmaking, with implications for pricing dynamics and regional trade flows.
Read some highlights from our US ferrous scrap market survey for April here, or click here to download your copy of the full US scrap trends outlook.
Turkey, the world’s largest scrap importer and a key price-setting market, remains central to the global outlook. While Turkish scrap prices have also risen on higher freight and energy costs, the sustainability of this trend is increasingly in question.
One key factor is the growing competitiveness of alternative raw materials. Russian pig iron, priced below imported scrap and facing limited export outlets, is gaining traction in Turkish mills.
Imports of Russian pig iron into Turkey have increased significantly, providing mills with a cost-effective substitute and enabling optimisation of raw material blends.
This substitution effect is likely to cap scrap demand, particularly if prices continue to rise, adding a further downside risk to the market.
In Europe, scrap prices have followed a similar upward trajectory, again driven primarily by cost pressures rather than demand.
Energy costs, particularly natural gas, have risen sharply, pushing up steel prices and widening the steel-to-scrap spread. However, construction activity remains subdued, limiting the extent to which higher steel prices can translate into stronger scrap demand.
Policy measures such as the Carbon Border Adjustment Mechanism (CBAM) are providing some support to domestic steel production by limiting imports. Yet this policy-driven uplift is constrained by weak end-use demand, reinforcing the fragility of current price levels.
China’s scrap market remains characterised by weak fundamentals. Steel demand, particularly rebar used in construction, continues to be constrained by a prolonged slowdown in the property sector.
Construction activity has declined sharply, and forward expectations point to only marginal recovery, insufficient to materially improve steel or scrap demand.
Margins for Chinese steelmakers remain tight, limiting their ability to absorb higher input costs. While rising prices for alternative raw materials could provide some support to scrap, this remains an upside risk rather than a baseline expectation.
Looking ahead, the balance of risks in global scrap markets appears tilted to the downside. Seasonal factors are expected to increase scrap availability, particularly for obsolete grades, while demand remains constrained across major regions.
At the same time, sustained high energy costs are likely to weigh on steel production, further limiting scrap consumption.
Taken together, these factors suggest that recent price gains are unlikely to be sustained without a meaningful improvement in downstream demand.
Understand current steel price trends and access hundreds of historical steel prices in one place. Find out more about Fastmarkets’ steel prices here.
The current scrap market is defined by a fragile equilibrium: prices supported by external cost pressures but fundamentally disconnected from demand.
Unless underlying consumption recovers or supply tightness emerges unexpectedly, the market is likely to face renewed downward pressure in the near to medium term. For market participants, this reinforces the need to differentiate between cost-driven price signals and genuine shifts in demand, a distinction that will be critical in navigating the next phase of volatility.
To hear more of Alex Kershaw’s insights on the recent volatility in global scrap steel markets and what is driving price movements across key regions, listen to the full Fastmarkets Market Briefing podcast.
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