Earlier this week, it was reported that Turkey’s ex-UK/EU scrap prices declined below $340/mt CFR in deals done late last week, bringing down scrap prices from other regions also. The reluctance of Turkish mills to conclude transactions in recent weeks resulted in an increased number of cargoes available for sale to Turkey. Some scrap suppliers were more inclined to keep their offers firm, while others thought prices could soften in the current quiet market conditions.
The collection prices at EU-based export yards declined mostly to €250/mt DAP, while towards the end of the week export yards started to test the waters with bids at €245/mt DAP. A sub-collector in Germany reported that most transactions done with EU-based export yards were closed at €250/mt DAP but there is increasing downward pressure particularly on HMS prices as local mills show little interest in that grade. Sources from all regions mention that freight costs have increased sharply over the past week, causing additional costs for sellers. Meanwhile, the euro-US dollar exchange rate remains at 1.166 and gives little room for EU-based sellers to soften their offers, especially given the increased freight costs. A source at a Turkish steel producer commented that they do not expect a sharp drop in prices and that stability should be expected in the coming days. Another player working for a Turkish mill also said they are currently meeting some of their demand for higher grade scrap from the domestic market.
However, despite the fundamentals signaling that the bottom for deep sea scrap prices will likely remain firm, ex-Baltic scrap prices declined to $337-338/mt CFR Turkey yesterday. This development caused cautiousness among market players, who started to question whether a deal was done confidentially from the EU at around $335/mt CFR. The rumors that surfaced in the market of a deal done with the HMS I/II 80:20 scrap price at and below $335/mt CFR have all been denied by the supposed buyer and seller.
Under the current conditions, the deep sea benchmark HMS I/II 80:20 scrap prices in CFR terms have moved down by 0.87 percent week on week. The prices are now 0.73 percent lower month on month in the deep sea segment, with quotations being in the range of $337-344/mt CFR.
The outlook for September US scrap pricing next month remained unchanged for a third week at sideways to potentially lower this week as a result of continued reports of low flat steel pricing as well as new reports that September-November mill maintenance programs could further limit local mill scrap buys during the September buy-cycle negotiation period next month, market insiders told SteelOrbis. Reports were still heard of a continued prime scrap “overhang”, the result of reduced mill purchases of prime scrap during August supply negotiations,, but to less of an extent than in the previous week.
“We’re expecting to see scrap coming off a bit in September as supply is steady although demand is likely to fall as a result of the annual mill outage season,” remarked one US Midwest-based mill scrap buyer. “We’re not expecting anything dramatic, but we could see prime scrap trade off between $10-20/ton.”
“There’s really not anything new out there on the consensus for September scrap,” said another Gulf Coast scrap insider. “We’re seeing the status quo, as there appears to be some downside pressure on primes. We’ll see if that happens, but all other grades are anticipated to trade sideways to August.”
Based on a sideways to down from August, September settlement US Midwest prime busheling scrap in the Ohio Valley could settle at or below $435-460/gt ($443-468/mt), while shredded scrap might settle at or below $375-380/gt ($381-387/mt). Ohio Valley P&S and HMS grades are seen at or below $361-371/gt ($367-377/mt) and $325-345/gt ($330-387/mt), respectively, scrap insiders told SteelOrbis.
August has been basically a quiet month in terms of movements in the scrap market in Germany, partly because most European countries, including Germany itself, have slowed down their activities for summer holidays and annual plant maintenance. As a consequence, both scrap demand and scrap inflow in Germany have remained low. The quiet market and the price correction are not only due to the traditional summer lull, the economic and industrial situation in Germany also remains difficult.
As for prices, mills have purchased E3 on average at €300-310/mt DAP, and E8 on average at €305-315/mt DAP. According to the latest data provided by BDSV, E1 scrap prices have fallen by €7.2/mt compared to last month, standing at €231.2/mt ex-warehouse.
The leading Japanese EAF-based steel producer Tokyo Steel has cut its domestic scrap purchase prices by JPY 500-1,000/mt in three regions. With this latest reduction, the total decrease in Tokyo Steel’s domestic scrap purchase prices, since the downtrend started on April 9, has reached JPY 3,500/mt on the lower end and JPY 2,500/mt on the upper end, with declines on US dollar basis of $30/mt and $24/mt, respectively.
The general range for H2 grade scrap price has declined by JPY 1,000/mt on the lower end to the range of JPY 37,000-40,500/mt ($250-273/mt) depending on the mill.
Following the recent price increases recorded in Taiwan’s import scrap market, prices have started to soften as demand slows down. Despite the decline observed in ex-US scrap offers, a source at a Taiwanese steel producer said the trend may be considered to be stable in terms of actual deal prices. “Containerized scrap prices have remained stable, while Japan’s offers are weakening. Also, billet quotations fell significantly last week. The Taiwanese market has maintained a wait-and-see stance,” he added.
Over the past week, offer prices for ex-US HMS I/II (80:20) scrap in containers have weakened by $3-5/mt to $307-310/mt CFR. Offer prices for Japanese H1/2 (50:50) scrap bulk cargoes have also softened, from the range of $320-325/mt CFR to $317-322/mt CFR.
Vietnamese mills have shown some interest in ex-US bulk scrap cargoes this week as Japanese scrap suppliers have maintained a cautious stance due to their firm collection costs. Market players report that the sentiment in Vietnam’s import scrap market is recovering after the government’s announcements of new projects and infrastructure investments.
Ex-Japan H2 scrap offers to Vietnam have increased by $5/mt over the past week to $320-330/mt CFR. Market sources report that the bids received from Vietnamese buyers are still in the range of $310-315/mt CFR. Meanwhile, Vietnamese buyers have concluded ex-US bulk HMS I/II 80:20 scrap deals this week in the range of $342-344/mt CFR.
The Tokyo Bay FAS-based prices for H2 grade scrap are closing the week at JPY 39,500/mt ($269/mt). The Japanese yen-based price has remained unchanged since August 8, while the dollar-based price has declined by $3/mt week on week amid the fluctuations observed in the Japanese yen-US dollar exchange rate.
South Korean producer POSCO has announced bids for Japanese scrap at higher prices in order to secure tonnages. Market sources believe that this move is the result of low local scrap availability. Scrap availability in the local South Korean market has been on the low side for months.
POSCO has shared bids for Japanese HS grade scrap at JPY 48,000/mt ($326/mt) CFR. The producers’ bids for shindachi grade scrap are now at JPY 47,000/mt CFR or $319/mt CFR.
In Pakistan, import prices for shredded scrap have slipped in occasional deals for ex-UK scrap this week, with sentiment weighed down by depressed domestic steel prices and a lack of buying appetite. At the same time, mills continue to wait for a potential post-monsoon recovery, while market sentiment has been further dampened by an “exceptionally high” flooding alert, as Punjab province - including the country’s second-largest city Lahore - faces severe risks due to heavy rains combined with India’s release of water from two dams. More specifically, offers for ex-EU/UK shredded scrap in containers have settled at $378-382/mt CFR, down by $2-3/mt week on week, with several deals for around 3,000 mt in total for ex-UK scrap reported to have been done at $377-378/mt CFR, following a deal for around 1,000 mt signed at $382/mt CFR at the beginning of the week. Meanwhile, offers for ex-UAE HMS grade scrap have been voiced at $370/mt CFR, the same as last week, while shredded scrap offers from the UAE have been voiced at $390/mt CFR.