At the beginning of 2016 the scrap steel and iron prices have reached multi year lows, and some markets are even lower than back in 2008 when the overall markets collapsed. Since then the prices have dropped even lower!! In the past year and half the overall global demand for metals has dipped way down below what we have seen not only in copper prices, but steel, aluminum, stainless, and almost all other metal prices decrease significantly. The market is in a large flux right now and because of the world supply and demand for both the finished metal and its raw materials, there is not a lot of room for people to see the prices going up anytime soon.
Scrap metal prices are a function of the price of finished steel. In 2015 US scrap export volumes dropped sharply by 15% mainly due to markets in Turkey, Middle East and Asia opting to purchase (cheap) billets from China instead of scrap. This has resulted in global scrap prices remaining under pressure which has continued during the first two months of this year albeit with the billet-scrap price advantage reducing. The recent gains in iron ore prices may produce modest gains in scrap prices.
One good indicator of the market is the price of oil. The sharp drop of the oil prices has affected the economy of many countries as well as the demand of many industries. Hence we will be hard pressed to see the market improve in the near term though the Brent crude has recently shown some resilience and in fact a small bounce. Until we have situations like oil prices are leveling out, China cutting back on their steel manufacturing capacities, general improvement in world trade, etc. we may not see firmer prices. The US Presidental election has also to be factored in.
Hence 2016 is expected to be a tough year for the steel, scrap steel and commodity markets in general and not many pundits are betting on a sharp turn around.
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