Rumors which surfaced on February 3 of two bookings in Turkey’s deep sea scrap market indicated that the week was starting with a price increase. Deep sea benchmark HMS I/I I80:20 scrap prices settled to $347/mt CFR on average, increasing by $3.5/mt. The rise in question had been anticipated late last week and did not come as a surprise to the market. Turkey’s import scrap market has continued its upward movement throughout the week under pressure from the supplier regions. A Germany-based scrap sub-collector said they concluded sales to export yards, with HMS I/II 70:30 scrap sold at €395/mt DAP, HMS I/II 80:20 scrap at €300-305/mt DAP and bonus grade scrap sold at €315-320/mt DAP, to ports in Amsterdam and Belgium. These prices indicate that export yards’ workable price levels have increased by €5-10/mt DAP over the past week. Another source in Germany reported that local scrap prices have also moved up, by €5/mt. In the northern parts of Europe, HMS I scrap prices are expected to increase at a faster pace.
In the middle of the week, the upward movement seen in Germany and Poland was also followed by the local Italian scrap market. Market sources report that supply scarcity and the low inventory levels held by mills are the drivers of this upward movement in Europe. Turkey’s import scrap market surged to $349/mt CFR in a single day on February 5, and then on the following day climbed further to $355.5/mt CFR in a deal disclosed to the market. “If we look only at what is going in the scrap segment, the price is showing signs of rising. However, the finished steel market is not really following at the same pace,” a source at one Turkish mill said on February 6.
As of today, February 7, US scrap offers are still at $360/mt CFR and above, SteelOrbis hears. However, several market players voiced their expectations of a peak today. “I think we are very close to the peak, if not already there. The number of offers in the market seeking buyers increased in two days. Therefore, the upward push is slowing down,” one supplier commented. Another agreed, stating, “China is still not back fully, but the future estimations are negative. While the construction season is very close to beginning in Turkey, we are cautious because Chinese materials may become a problem once again.” A source at a major Turkish mill noted that the recent demand recovery seen in the rebar market has slowed down this week, “The increase observed in the scrap segment could not have been carried fully over to finished steel sales,” he said. According to sources, there are at least eight offers right now in the market. Only one of the European scrap suppliers surveyed said prices have more room to increase, commenting, “I think prices will see above $360/mt CFR. We are hearing some significant bids for ex-US cargoes denied by the sellers.” While there were rumors of ex-US scrap bookings done in Turkey at $358-359/mt CFR today, they have not been confirmed by the buyer or the seller. Having said that, SteelOrbis’ ex-US scrap prices were already revised to $358/mt CFR after the ex-Netherlands deal closed yesterday at $353/mt CFR.
Under the current conditions, the deep sea benchmark HMS I/II 80:20 scrap prices in CFR terms have moved up by 3.19 percent week on week. The prices are now 4.18 percent lower month on month in the deep sea segment, with prices being in the range of $353-358/mt CFR.
Ferrous scrap prices for the month of February in the US Midwest are now seen settling $30-40/gt ($33-43/mt) higher as recent cold weather and snow have caused inventories at both mills and suppliers to plummet, market insiders told SteelOrbis this week.
This week’s scrap call differs from that seen during the week of January 27, when the February scrap market was seen at least $20-30/gt ($22-32/mt) higher.
“Mills are bone dry on inventory. It’s the worst I’ve ever seen it,” commented one major US Midwest scrap market supplier, adding, “Scrap prices are likely to continue to rise until mills get invested levels back to a healthy place. I’m thinking it’s a seller’s market for the next 60-90 days.”
Market insiders confirmed that many mills are “late to the game” in purchasing February scrap requirements. At press time, February scrap trades in the US were reported at $40/gt ($43/mt) higher for shredded and prime grades, while cuts were heard traded at $30/gt ($33/mt) higher.
Based on an average of the $30-40/gt increase for February scrap, Ohio Valley HMS 1 could settle at $375-395/gt ($381-401/mt) delivered to customer, while shredded scrap could settle at $430-435/gt ($437-442/mt) on a delivered basis. P&S is likely to settle at $420-$430/gt ($427-437/mt) delivered to customer, while prime busheling scrap could settle at $445-470/gt ($452-478/mt) delivered to customer.
According to sources, at the end of last week some Italian steel producers with rather low scrap yard inventories accepted a €10-15/mt increase due to the scarcity of supply in the market, creating tension in the local scrap market and leading to a generalized €10/mt increase in scrap purchase prices. The same is happening in terms of import scrap prices from France and Germany.
Among traders there is an expectation of further increases in scrap prices and they foresee a tense market in February and March. Although producers are trying to counter the upward trend by buying lower tonnages, some believe that scrap prices are unlikely to remain stable or to fall. “Production is low. Some plants stop at certain times of the day and others produce at lower rates to cope with the shortage of finished steel orders and high energy costs. The pace is lower, but production is still going on and further increases in scrap prices now seem inevitable,” one source stated.
There has been a €5-10/mt increase in local Spanish scrap prices by some mills, and market participants expect that the others will follow in the coming days. According to sources, supply and demand are still low but fairly balanced. However, local scrap prices have risen to match import prices, as anticipated last week.
In the local Polish scrap market, prices have risen just like in other European countries, even though Poland has seen higher increases compared to, for example, Italy and Germany. In these two countries, mills were talking about a rise of €10/mt for all grades, whereas in Poland it seems that new prices will be higher by at least €12-19/mt.
In Poland, HMS I purchase prices from mills stand at around €300/mt delivered to mill, whereas for HMS II they are standing at €283/mt delivered to mill.
As for exports, collection prices for HMS I are at around €300/mt DAP, which is up €10-15/mt week on week.
The situation on the local German scrap market is slightly different. SteelOrbis was expecting stable prices for February, but, according to sources, suppliers in Germany have started to ask for a €10/mt increase. The picture, however, will be clearer next week, when mills announce their new purchase prices.
Following the long holiday from January 25 to February 2, Taiwan’s import scrap market has made a positive start in terms of prices. Offers from both the US and Japan have increased sharply as compared to the levels recorded on January 24, following the trend of the international scrap market. Market sources report that, not only are scrap prices rising for Taiwan, but billet prices are also moving up, supported by the surge in international scrap prices.
Offers for ex-US HMS I/II (80:20) scrap in containers to Taiwan have moved up by $10-13/mt to $305-310/mt CFR since January 24. There have been a limited number of deals at $304-305/mt, rising from $295-297/mt CFR before the holiday. Offers shared for Japanese H1/2 (50:50) scrap bulk have also increased by $6-8/mt in this period to $316-323/mt CFR.
After the Tet holiday on January 28-February 3, Vietnam’s import scrap market has moved up. While trading has not recovered fully in Vietnam after the holiday, market sources think the market has further potential to move up.
Offers for Japanese H2 scrap to Vietnam have moved up by $5/mt to around $315-320/mt CFR. Despite the increase in offers, Vietnamese buyers’ workable price levels for this grade are still at around $310/mt CFR. Ex-US bulk HMS I/II 80:20 scrap offers to Vietnam have also increased by $5/mt week on week, to $345-350/mt CFR.
Tokyo Bay FAS-based prices for H2 grade scrap are currently at JPY 39,500/mt ($260/mt), with a rise of $5/mt in dollar-based prices.