A surprise ex-US deal has caused confusion in Turkey’s import scrap market earlier this week. SteelOrbis has learned that the deal was done on Monday, August 22, for HMS I/II 80:20 scrap at $402/mt CFR, and it will be shipped in September. Despite the higher price level observed in this deal, trading in Turkish scrap market has not accelerated. It was another silent week, as sellers are in no rush to accept Turkish mills’ desire to lower quotations. On the other hand, Turkish mills once again started to voice they may halt or cut production in the coming months against the backdrop of stagnated steel demand. Sellers’ collection prices give them almost no room to lower their offers to Turkey, while some of them also say that Turkey may not find many cargoes when they returned to market. A major US-based supplier stated that “there can be around 10 cargoes left in the market for September shipment.” A Baltic based supplier stated that “situation is not good for Turkish mills and they will ask for lower quotations, this $402/mt CFR is not here to stay.” Another seller that is working from several regions reported that principles are not accepting lower bids received from Turkish mills. As a result, the market is in another duel between sellers and buyers and is waiting for the next move. It also attracts attention that US and EU based sellers are active in India and Bangladesh where prices remain attractive despite some changes amid previously positive sentiments.
Under the current conditions, the deep sea benchmark HMS I/II 80:20 scrap in CFR terms has recorded a 0.77 percent increase week on week. The month-on-month prices are now 11.91 percent higher in the deep sea segment, with prices being in the range of $387-402/mt CFR.
Scrap market sources throughout the US said they believed the market would trend sideways. This week, the differential opinions have become less pronounced, as nearly all sources polled said they think the market will stay level, although some still believe the market will have some regional variances. “Flat is my guess for September in the Northeast. It’s been very quiet this month and there’s not much scrap coming into the yards,” a source said. “The Southern markets [seem to be] showing some signs of strength. I believe that any Southern mills looking for a normal compliment of scrap will have to pay up.” A second source agreed. “[Predictions] are all over the board,” he said. “The [scrap] yards are very slow so [prices] will be a matter of [which mills] are melting.” According to media reports, four Nucor mills and US Steel’s Mon Valley works will be out for maintenance sometime next month. For now, it’s unclear whether September’s buy cycle will begin before or after Labor Day weekend.
Over the past month, prices in the local German scrap market have increased in contrary to the previous expectations. At the beginning of the month, market intermediates anticipated a sideways movement at best, but mainly a decline in quotations because of the holiday in the EU region. But the water levels on German rivers declined sharply due to hot weather conditions and drought. As scrap collection activities slowed down, ready inventories cannot be moved around as easy as in the past, local scrap prices in Germany has remained stable in the first half of August, but then started to move up against the backdrop of supply declining below demand.
Since the problems regarding logistics remain unchanged, the supply flow to mills or export yards is not expected to accelerate in the short term. It is observed that the main transportation route on the Rhine River is now closed to even some empty vessels because water level is too low. According to Federal Waterways and Shipping Administration, “the expected rain in the coming days is forecasted to increase levels on the Rhine River by 50-to-80 centimetres”. While rain may ease the current depth of the problem, there are commitments resulting from previous scrap contracts that are not still met due to the delay in transportation. Hence most players expect local German scrap prices to increase further in September.
While the end of summer holiday is approaching in Italy, some plants are still out of the market. They are evaluating the energy prices which will inevitably affect the restarting process. Some Italian producers decided to restart production with a slower pace, with only one furnace instead of all. Some Italian mills started to make price inquiries for scrap but the price levels are similar to the ones before the holiday. For example, they are €30-50/mt lower than Germany. Generally steel plants are cautious against the backdrop of energy and gas prices becoming a huge factor on decisions. SteelOrbis understands that the trend of the local Italian scrap market will depend on mills’ decision about their capacity utilization rates, hence the weekly prices are left stable for now.
On August 24 and 26, the major EAF-based steel producer in Japan, Tokyo Steel, has announced two separate increases for local. Having been cutting its prices gradually since May 6, the producer changed its price strategy on August 18 and started to increase its local scrap prices. Supported by the revived foreign demand for the Japanese scrap in other Asian countries, prices are moving up also domestically. A Japanese source reported that “Some mills raised their purchasing price so market sentiment is optimistic. We also feel it is a temporary uptrend”.
Tokyo Steel’s general range for H2 grade is at JPY 42,000-46,000/mt ($307-336/mt) depending on the mill. Tokyo Steel’s shindachi scrap prices are at the range of JPY 44,000-48,000/mt ($321-351/mt).
While scrap prices in Southeast Asia have continued to increase over the past week, Vietnam is facing the same result, receiving higher offers from its scrap suppliers. However, the situation in the Vietnamese steel market is still unchanged, steel demand is on the low side, hence Vietnamese mills are in no rush to book scrap from the currently voiced offer prices. “We need to watch further. In fact our steel market is still in a bad situation. Some mills here have cut down their [steel] prices this week,” a Vietnamese source commented. Market players think Vietnamese mills will monitor the steel demand closely and they expect a recovery in demand in October after the rainy season ends.
As a result, the reference price for ex-Japan H2 scrap has increased by JPY 3,500/mt ($22/mt) on the lower end due to the higher bids coming from South Korea and by JPY 2,000/mt ($11/mt) on the upper end due to the upward pressure observed both in Vietnam and Taiwan to JPY 46,000-46,500/mt ($337-341/mt) FOB.
South Korean mills are raising their domestic scrap procurement prices, while they also offer higher levels for Japanese scrap. This is a policy maintained to secure the tonnages they need, though steel demand is not recovered much in South Korea. Therefore, the rising trend in South Korean scrap market is expected to continue, at least until the four day Choosuk holiday to start on September 9.
As compared to the levels announced on August 18, Hyundai Steel has increased its bid for Japanese H2 grade by JPY 3,500/mt to JPY 46,000/mt ($335/mt) FOB. Hyundai’s bids for HS scrap have risen by JPY 4,000/mt or $24/mt to JPY 52,000/mt ($379/mt) FOB. Hyundai did not share any bids for shindachi bara scrap this week, having announced its bids at JPY 48,000/mt ($355/mt) FOB last week. Finally the steel mill raised its bid for shredded scrap by JPY 4,000/mt or $23/mt to JPY 51,000/mt ($371/mt) FOB.
SteelOrbis has learned that bulk HMS I scrap offers from the US West Coast given to South Korea are at $400-410/mt CFR
During the past week, import scrap offers to Taiwan have moved up by $10-15/mt. While the scrap prices are rising gradually in the region, market players state that demand recovery is lagging. Early this week there were some deals for ex-US HMS I/II 80:20 scrap in containers to Taiwan at around $365s/mt CFR. However, as of today, August 26, the offers for this grade are in the range of $375-380/mt CFR, indicating a $15/mt increase week on week. A source from a major Taiwanese mill said that this level in new offers are considered “workable.” In the current week, prices for Japanese H1/2 50:50 scrap by bulk to Taiwan at $375/mt CFR this week, but no new deals were closed for this grades.
In the current week, prices for Japanese H1/2 50:50 scrap by bulk to Taiwan have moved up from $375-385/mt to $385-395/mt as in offers, both CFR.
In Pakistan, general business activity has remained muted due to slow end-users’ demand affected by heavy rains in the country. Import offers of ex-UK/EU scrap in containers in Pakistan have fallen to $480-490/mt CFR, down by $15-20/mt week on week. However, despite the price decrease, most Pakistani buyers have been refraining from new purchases, with only a few deals reportedly signed at $490/mt CFR at the beginning of this week.
In Bangladesh, market insiders have finally reported about fresh bookings for scrap in bulk. Specifically, a deal for around 30,000 mt mixed ex-US cargo in bulk was done last week at $455/mt CFR for HMS grade scrap and at $460/mt CFR for shredded. Besides, another mixed cargo for 34,000 mt in total ex-Baltic was done at the end of last week at $444/mt CFR on average. Meanwhile, trade has remained muted in the containerized segment this week. Offer prices for ex-UK shredded scrap in containers in Bangladesh have been voiced at around $510-520/mt CFR, same as last week.