Foundry raw material prices 2024: stabilization and adjustments

After the peaks and strong volatilities of the previous periods, 2024 was characterized by more contained fluctuations and a general decline in demand.

During 2024, metal commodity markets, particularly ferrous scrap, pig iron and aluminium alloys, experienced a period of stabilization and corrections after the peaks and fluctuations of the previous two years. Unlike 2021 and 2022, when foundry raw material prices were pushed up by explosive demand and disruptions in global supply chains, 2024 saw a normalization, with more contained fluctuations and a slowdown in demand. Despite global economic difficulties and reduced industrial activity, markets remained relatively stable, with moderate price reductions and increasing diversification of supply sources, which helped mitigate the effects of external factors, such as sanctions and export restrictions from countries such as Russia.

 In this context, the main categories of ferrous scrap and pig iron saw a contraction in prices, while aluminium alloys showed signs of recovery. Detailed analysis of metal commodity markets highlights a 2024 characterized by price adjustments, but with mixed prospects for the future, especially in view of the challenges related to quotas and demand in the steel and foundry sectors.

Ferrous Scrap: Price Adjustment in 2024

2024 can be considered a year of adjustment in raw material prices for foundries in the ferrous scrap sector.

Unlike 2021, when prices were pushed higher by explosive post-pandemic demand, and 2022, when disruptions in global supply chains fueled significant increases, 2024 has seen a trend towards stabilization, with smaller swings and a natural correction from previous peaks.

Although there were some monthly fluctuations, the month-to-month price changes were not particularly large. Metal commodity markets responded to external factors (such as the global economic slowdown) with small corrections, without major price spikes or crashes.

Prices for all foundry scrap categories (Corrective, New Sheet Metal and Bundles) saw an average annual reduction of between 4% and 4.7% compared to 2023: a modest decline, indicating a relative stability of the market.

In 2024, demand for ferrous scrap contracted due to reduced industrial, manufacturing and steel activity globally. Despite this slowdown, foundry raw material prices did not collapse, as supply also experienced some difficulties, with challenges in material collection and availability. This led to a moderate adjustment in prices, keeping the market relatively stable without drastic fluctuations.

Pig iron ingots: price correction in 2024

2024 was also a year of price adjustment for pig iron ingots, after the peaks reached in the two-year period 2021-2022. The decrease compared to 2023 reflects a containment of demand and a stabilization of the market, in the face of a less favorable economic context. The correction affected all three types of pig iron ingots for foundries (refining, hematite and spheroidal), with a greater impact on the prices of raw materials in foundries on that for spheroidal, which recorded the most marked decline:

• Refining: the decrease in 2024 (-5.8%) compared to 2023 is the reflection of a less dynamic market, with less strong demand and a certain correction of prices after the peaks of previous years.
• Hematite: the -12.1% decline in 2024 versus 2023 highlights a decreasing demand, with supply having to adapt to more difficult global economic conditions.
• For spheroidal: the -13.4% decline in 2024 versus 2023 confirms a market adjustment, in line with the general slowdown in pig iron demand and the stabilization of prices.

Reduced activity in the iron and steel industry and foundry industry has severely impacted pig iron consumption and demand. This has meant that Russian pig iron supply, while reduced, has not put pressure on foundry raw material prices. In other words, while Russia has faced export constraints to the European Union, overall pig iron demand has been more subdued, which has reduced the possibility of Russian pig iron shortages leading to significant price increases.

Furthermore, diversification of supply sources, with other pig iron producing countries filling the market space previously occupied by Russian pig iron, has helped stabilize the metal raw material market, offsetting the effects of limited Russian supply. Therefore, while Russian pig iron will remain significant, it will not have a major impact on global prices in 2024, thanks to moderate demand and the presence of alternatives in the market.

Analysis of pig iron imports in 2024

The general decline in pig iron demand for Italy is confirmed by the 16% reduction in imports, linked to lower industrial activity, particularly in the steel and foundry sectors.

In the first 9 months of 2024 (latest available data), Italy imported a total of 1,175,218 tonnes of pig iron (1,403,866 tonnes in the same period of 2023).

Russia, while remaining the most important supplier of pig iron for Italy, saw a sharp contraction of 29% in its exports to our country, reflecting the effects of international sanctions and in particular the quota adopted by the European Union at the end of 2023. Despite the decline, Russia continues to represent a significant share of the market (65% of total imports, equal to 768,909 tonnes in 2024 against 1,077,885 tonnes in 2023), but its relative weight on total imports decreased due to the increase in supplies from other sources (it was 77% in 2023).

Imports from Africa showed an increase of 26%, indicating a growing diversification of supply sources. The volumes imported in the first 9 months of 2024 were equal to 194,119 tons against 154,206 tons in 2023. The percentage weight, compared to total imports, went from 11% (2023) to 17% (2024).

Imports from Ukraine recorded a remarkable increase of 91%. This is the result of partial recoveries in pig iron production by Ukraine despite the ongoing conflict. Its market share therefore increased from 3% to 6% of total imports. In terms of tonnes, it went from 38,243 to 72,916 tonnes in the first 9 months of 2024, with a progressive growth trend, especially in the last quarter of the year.

Imports from Brazil fell to zero in 2024, representing a total loss of supplies from this country. This disappearance is essentially linked to the lower competitiveness of Brazilian pig iron compared to other producers.

Imports from Germany fell by 32% to below 10,000 tonnes.

Imports of pig iron from the Russian Federation: exhaustion of the 2024 quota

The import of pig iron from the Russian Federation to the European Union is regulated by Regulation (EU) 833/2014, which imposes sanctions on goods originating in or exported from Russia, as specified in Annex XXI. However, for certain products, including pig iron (CN code 7201), there are exceptions. In particular, Article 3i establishes that the bans do not apply to certain quantities of pig iron:

• 1,140,000 metric tonnes between 19 December 2023 and 31 December 2024;
• 700,000 metric tons between January 1, 2025 and December 31, 2025.

The 2024 quota for the import of pig iron from the Russian Federation, identified by order number 09.8260, was exhausted on September 3, 2024. From that date, it was no longer possible to import Russian pig iron until the new quota for 2025 was opened.

Impact of the economic weakness on the foundry sector in 2024

During 2024, the economic weakness of the foundry and steel sector, which are the main consumers of pig iron, contributed to a reduction in demand for raw materials, temporarily easing the difficulties related to the limits imposed by the quota of Russian pig iron. The lower demand meant that, despite the restrictions, no significant problems arose in the supply of pig iron for the steel sector and for foundries.

The outlook for 2025: a halved quota and greater difficulties

The outlook for 2025, on the other hand, is worrying. The expected halving of the quota, with a reduction of around 40% compared to the volumes available in 2024, could create serious difficulties for companies in the sector. This risk increases further if, as hoped, there were to be a recovery in demand for raw materials, linked to the restart of the finished products market. In the first few days of the year, 300,000 tons have already been withdrawn, which suggests that the entire capacity could be exhausted within the first two months.

Aluminum ingots: moderate recovery in prices in 2024

After the significant decline in smelter raw material prices in 2023 (compared to the peak reached in 2022), 2024 has seen a moderate recovery, signaling a stabilization phase for primary aluminum.

Although not reaching the peak level of 2022, 2024 has shown a positive trend compared to 2023, suggesting some recovery in demand and a possible improvement in global economic conditions, despite persistent difficulties in some sectors.

Comparing 2024 and 2023, a moderate recovery in aluminum prices emerges, both for LME primary aluminum and for primary aluminum ingots Italy. The main highlights of 2024 compared to 2023 are:

1. LME primary aluminum (Cash Seller): in 2023 the average annual price was 2,082.41 USD. In 2024, the price rose to 2,236.91 USD, with an increase of +7.4% compared to 2023.
2. Primary Aluminum 99.70 in blocks Italy: in 2023, the average annual price was 2,477.33 EUR. In 2024, the price increased to 2,689.67 EUR, with a growth of +8.6% compared to 2023.
    

Secondary Aluminum Alloys: 2024 was a year of recovery

Overall, 2024 was characterized by a generalized recovery in the prices of foundry raw materials in the aluminum alloy sector, although with differentiated trends depending on the markets. The growth in the prices of secondary alloys was more marked in the LME segment, while that of die-casting alloys and in Italy was less accentuated. However, all sectors recorded positive increases, a sign of relatively stable demand and a gradual recovery in market conditions after the fluctuations of the previous period.

Data and annual changes

LME Secondary Aluminum Alloys:

• 2023: 1,691.63 USD
• 2024: 1,953.08 USD
• 2024 vs 2023 variation: +15.5%

Germany - Aluminium Pressure Diecasting Ingot DIN226/A380:

• 2023: 2,187.57 EUR
• 2024: 2,305.88 EUR
• 2024 vs 2023 variation: +5.4%

Secondary Aluminium Alloys Italy (EN AB 46100):

• 2023: 2,711.08 EUR
• 2024: 2,905.54 EUR
• 2024 vs 2023 variation: +7.2%

LME Secondary Aluminium Alloys: the price of secondary aluminium alloys saw a significant increase of 15.5% in 2024 vs. 2023.

Germany - Aluminium Pressure Diecasting Ingot DIN226/A380: The price of aluminium alloy in Germany recorded a more moderate increase of 5.4%, suggesting a stabilization of prices after the peaks recorded in the previous two years. This could be a sign of balance between supply and demand.

Secondary Aluminium Alloys Italy (EN AB 46100): In Italy too, the price of secondary aluminium alloys showed a moderate growth of 7.2%. The positive trend, although lower than the secondary alloys market at LME level, signals an increase in demand and pressure on production costs.

In summary, 2024 confirms itself as a year of recovery for the metal raw material market in the aluminum alloy sector, with a moderate increase in prices, but still more sustainable and less volatile than peak years such as 2022.

Foundry metal prices still far from 2020 lows

In 2020, foundry raw material prices had reached lows due to the global economic crisis caused by the pandemic. The recovery that followed 2020 was rapid, but despite the price recoveries in recent years, end-2024 prices remain well above those lows. This suggests that metals, especially strategic ones such as aluminum and cast iron, are still under the influence of higher structural costs, with a price base that has shifted upwards compared to pre-pandemic levels.

Light metals, especially secondary aluminum alloys, saw the most significant increases, with an increase of up to 67% (secondary aluminum alloys in Italy). The smallest increases were recorded for ferrous metals, such as pig iron in hematite ingots (+26%) and ferrous scrap (+41%).

The main reasons for the impact on raw material prices in foundries include the continued volatility of energy costs. Although energy prices have shown some stabilization, they remain at higher levels than in 2020. This has continued to push up production costs, especially for energy-intensive metals such as aluminum and pig iron. Geopolitical tensions, in addition, (particularly the war in Ukraine) have kept economic uncertainty high, with direct impacts on supply chains and price developments. Furthermore, global inflation has had persistent effects on many production costs.

Source: M. Pisanu for In Fonderia – Il magazine dell'industria fusoria italiana