European crude steel production is going through a process of decarbonization, with an expected rise in flat steel-producing electric arc furnaces (EAFs) at the expense of higher-polluting blast furnace-basic oxygen furnaces (BF-BOFs) projected.
This will see mills using higher amounts of prime grade E8 scrap, alongside iron metallics and makes reliable price forecasts an ever more important tool for market participants in the region.
In turn, Fastmarkets is launching new E8 grade prime scrap price forecasts for Germany and Italy. The new forecasts will supplement Fastmarket’s current scrap price forecasts in the region that cover obsolete scrap grades.
Prime scrap demand from flat steel-producing EAFs expected to rise in Europe
Fastmarkets projects that over the next 10 years, EAF output in Europe will rise, with much of these increases expected to produce flat steels such as hot rolled coil.
Currently, in the EU and UK, EAF output accounts for around 45% of steel production, with this dominated by long steel production.
Fastmarkets projects that EAF output will rise to around 55-60% of steel production by 2030, with the increases to be heavily flat steel-focused.
Typically, long steel production utilizes obsolete scrap to produce long steel, while flat steel produced in EAFs requires higher-grade prime scrap.
The US is a potential indicator of the future of European EAF output
Approximately 50% of flat steel production in the US is via the EAF route. In turn, the differentials between prime scrap and obsolete heavy scrap in the US are far wider than in Europe, as there is a major source of demand for prime scrap, that is not present in Europe.
Indeed, in Germany, the prime scrap (E8) price has averaged just $14 (€12) above old heavy (E3) scrap from January 2015 through to May 2024, while in the US, the equivalent prime scrap over heavy old scrap has averaged $79.
As demand for prime scrap to produce flat steel rises in Europe, the market is likely to see a widening in the European prime over heavy melt scrap differential in the near term.
Fastmarkets has launched two new European prime scrap price forecasts
Fastmarkets new price forecasts will allow consumers of European E8 prime scrap to get a view on price dynamics and outlooks of this changing market, giving confidence to market participants as they plan for the future and the evolving steel industry in Europe.
These forecasts will be available to subscribe to via the Steel Scrap Market Tracker and the Fastmarkets dashboard.
Fastmarkets’ forecast methodology for these new forecasts is a testament to our commitment to innovation and accuracy.
We combine our in-depth knowledge of the European scrap sector with machine learning applications, supplementing our already highly accurate obsolete grade scrap price forecasts in the region.
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