Chinese stainless steel producers are stepping up purchases of stainless steel scrap as policy changes alter global trade flows, the Bureau of International Recycling (BIR) reports. While Europe’s scrap demand remains steady, prices are under strain. Asia has seen volatility linked to nickel prices, and India continues to show resilience.

What is driving this shift, and what could it mean for stainless steel markets?

Europe steady, but pressures remain

BIR notes that demand for stainless steel scrap across Europe has stayed relatively stable. Even so, prices continue to face downward pressure, largely due to ongoing imports of nickel pig iron and stainless steel slabs. European stainless steel demand showed a modest improvement in February, offering some optimism for market participants.

At the same time, the EU’s Carbon Border Adjustment Mechanism (CBAM) has added uncertainty to the market. While the policy is expected to support domestic producers over the longer term by discouraging higher-carbon imports, its immediate impact has created questions around supply and pricing.

Italy reflects many of these challenges. Market conditions there remain difficult, with weak demand from key sectors such as automotive and household appliances. High inventory levels are keeping prices subdued, while elevated energy and raw material costs are squeezing margins. Scrap collection and trading activity have also mirrored slower industrial output and cautious buying.

Industry leaders describe the situation as a period of adjustment for stainless steel producers and recyclers, with many watching policy and cost trends closely.

Asia tracks nickel swings and policy shifts

Asian stainless scrap markets have been more volatile, reacting strongly to movements in London Metal Exchange nickel prices. Nickel values climbed sharply from around $14,000 per metric tonne in mid-December to nearly $19,000 by late January, before easing. This surge triggered a rally in stainless scrap prices across the region.

Demand patterns, however, have varied. Taiwanese producers reported weaker scrap demand in the final quarter of last year. South Korea’s consumption remained stable but subdued through the winter months. Following scheduled furnace maintenance, production levels have now largely normalised, with demand expected to stabilise further after the Lunar New Year period.

Japan’s stainless scrap consumption has remained broadly steady. However, exports have softened as domestic mills increasingly prioritise locally sourced material, reflecting a more cautious and self-reliant approach.

India and Middle East show resilience

Policy developments in China and Indonesia have played a key role in reshaping raw material flows. China’s tighter export controls on stainless steel products, combined with Indonesia’s reduction in nickel ore quotas, have encouraged Chinese mills to accelerate purchases of stainless scrap and nickel pig iron.

India, meanwhile, continues to stand out for its relative strength. In 2025, the country recorded solid growth in stainless steel production, supported by rising scrap use. Despite higher output, weaker export demand has enabled Indian mills to rely more on domestically generated stainless steel scrap, helped by competitive prices and favourable financing conditions. Market participants often point to India’s growing role in the stainless steel value chain.

In the Middle East, demand for stainless steel and special alloys remained stable, supported by construction, oil and gas, and desalination projects. Saudi Arabia, facing limited domestic scrap supply, continues to depend on imports, sustaining consistent regional trade flows.