In the world of trade, everything is interconnected: the demand for some goods increases the demand for others and reduces the demand for others. The same applies to the scrap metal market, which is firmly connected with the work of metallurgical enterprises.

Why collect recyclables? First of all, chermet is necessary for the production of steel and other metals. It is actively bought by metallurgical companies — it is profitable for them to melt the second metal and make rolled metal from it. The same thing happens with non-ferrous, precious metals.

Iron ore is first mined, then it is sorted, melted — this is a more expensive technology than melting scrap metal and obtaining finished rolled metal from it. Also, the collection of scrap metal allows less exploitation of natural reserves.
Logically, the more steel is sold on the market, the more recyclable materials are needed by metallurgical enterprises and the more expensive they buy it.

Thus, if the steel industry is in crisis, then the demand for scrap is falling, respectively, and the price. So we gradually came to the idea: problems in the steel and rolled metal market in 2022 had a direct impact on the cost of chermet. There are, of course, other factors affecting the cost, but it is the trends in metallurgy that particularly affect the scrap metal market.

So, the metal market in the Russian Federation has been falling rapidly since the beginning of the conflict in Ukraine — this concerned prices for everything, for:
metal products;
scrap metal.

The latter showed a 2-fold drop at the moment: from peak values of 30 thousand rubles per ton, scrap dropped in June to 15 thousand rubles per ton.

However, in July, the price went to the area of 20 thousand rubles, where it stabilized, at the end of September, trading was at about the same values. You can see the dynamics on the chart.

The main drop in scrap metal did not happen in March/April, as many expected — it was then, according to most experts, that the cost of the black metal should have fallen to minimum levels, they associated this with the effect of sanctions, but in June. Before that, there was even a serious rebound to levels close to the maximum in 2022. But then everything came back to normal, at the end of May and in June there was a real collapse: the cost of recyclables fell almost twice from the maximum February values.

Then, in July, there was a rebound and the fall was partially recouped — the indicators returned to the area of 20 thousand rubles, continue to be there today.

What is the reason for the increase in scrap prices in July and August 2022? This is due to the accumulation of scrap stocks by metallurgical companies during this period. At the moment, demand is greatly increased with an unchanged supply, so the cost usually increases in July and August. The same thing happened in 2022, despite the crisis in the industry. Metallurgical companies were experiencing an acute shortage of scrap, according to a source of one of them: "almost every enterprise in the sector in July-September purchased 20-30 thousand tons more than its needs at other times."

Demand was also spurred by Turkey, which is actively buying up Russian chermet. This is due to an increase in export quotas from the EU due to the ban on the export of scrap from Russia. On the graph, see how the cost of scrap changed in Turkey and Russia.

In Turkey, scrap metal cost more than in Russia for 2 years, but autumn has become a time of price equalization, and in September trade is at the same levels.

By the way, similar trends were observed in other regional markets: a decline in prices since April and a rebound in July. The exception is Chinese, which declined more slowly than others, but did not rebound in July.
If we understand why chermet fell in price in September, then the reason is the same: in July-August, Russian companies mostly replenished stocks and prices began to decline, although not much, literally by 1,000 rubles per ton.

Expensive gas, the rise in price of coal after the rejection of Russian fuel has led to a serious rise in the cost of steel in Europe. This has reduced the demand for rolled metal. In some cases, production became unprofitable and stopped, which reduced the needs of enterprises in chermet and caused a drop in prices for it.

Russia today is practically excluded from Western markets, including in the metallurgical sector, which has led to the natural packing of warehouses inside the country. Of course, there are other markets, for example, India and China, but they are ready to buy our products with significant discounts — by 20-30%. Plus, logistics problems are added, transportation costs increase. This in some cases led to the sale of rolled metal at a loss. This situation does not improve trade and does not increase the demand for scrap within the country.

The increase in export duties also negatively affected the cost of chermet.

The above could not but affect the price of scrap metal, which becomes cheaper following a decrease in the cost of the final product, because otherwise it is simply unprofitable for metallurgical enterprises to engage in production by buying expensive recyclables.

The latter, by the way, consider chermet expensive even at current prices and regularly lobby for an increase in export duties: more recyclables remain in Russia — below the price. However, the situation led to the exit of many major players from the business, which somewhat stabilized the prices, because the supply decreased.