Introduction: COVID-19 Vaccine Causes Scrap Metal Prices to Skyrocket

The price of scrap metal has truly skyrocketed since mid-November. The rollout of the COVID-19 vaccine is not only giving investors confidence in the future, but steel producers also believe they will have a well-filled order book for 2021. They are eagerly ordering scrap metal as a raw material for their steel production. However, there is little scrap iron available in Europe, resulting in a shortage.

In November and December, a huge number of seagoing vessels carrying steel scrap were sold from Rotterdam to Turkey. Rotterdam is considered Europe’s most important port for the export of steel scrap to Turkey. The major steel manufacturers, which produce rebar in particular, are based there.

Scrap steel prices in South Asia have also skyrocketed. As a result, steel mills in India and Pakistan have raised their prices as well. However, due to the limited availability of shipping containers, freight rates have also skyrocketed. Consequently, steel mills here are having difficulty sourcing materials. In addition, shipments that have already been purchased have been delayed, putting production at risk.

Not only is the price of scrap metal breaking all records, but the price of iron ore is also at its highest level since 2011. This price increase is primarily driven by growing demand for iron ore from China. The Chinese produce more steel on their own than the rest of the world combined.

Despite the prevailing optimism at the moment, there is some pessimism among market experts. For example, it has recently become clear that a mutated form of the COVID-19 virus is spreading rapidly in the United Kingdom. As a result, many countries have already classified the United Kingdom as a high-risk country, which entails certain travel restrictions. In addition, COVID-19 infection rates are rising worldwide, and more and more lockdowns are being imposed. If this trend continues, it could well trigger a significant downward spiral in scrap metal prices.