With ex-Baltic scrap quotations decreasing once again in a new deal, expectations for Turkey’s import scrap prices have declined below $400/mt CFR, at least for ex-EU and ex-UK materials.
The number of deep sea scrap offers to Turkey now exceeds the needs for May shipments. Since China is exerting negative pressure on the international steel market, the mood in Turkey is pessimistic for the future trend of prices and for trading activity. Another issue widely talked about is the Turkish lira-US dollar exchange rate. Some players report that the exchange rate they are offered is higher than the official rate. This is creating great uncertainty, not just for the scrap segment but for all segments. “The cash flow problem is felt strongly in the market,” one source said, with several sources on all sides agreeing. While there are no new developments regarding the earthquake-hit regions in Turkey in terms of construction and rebuilding efforts, SteelOrbis hears that local scrap generation in the region is very good. Iskenderun-based mills are mainly working with domestic scrap and are exerting extra pressure on import scrap prices.
While some Turkish mills have already planned cuts in capacity utilization rates, some will take such steps in May, particularly in the long steel segment. Whether others will follow suit remains to be seen, but some mills say it is possible they may start maintenance works if the sluggish demand conditions continue for long steel. For now, the general expectations for ex-EU and ex-UK HMS I/II 80:20 scrap prices are below $400/mt CFR, and closer to levels around $395/mt CFR. While negative factors such as political uncertainties, financial problems and exchange rate fluctuations continue to persist in Turkey, import scrap prices will remain under pressure in the first half of May, SteelOrbis foresees.
Under the current conditions, the deep sea benchmark HMS I/II 80:20 scrap in CFR terms has decreased by 5.72 percent week on week. The prices are now 8.99 percent lower month on month in the deep sea segment, with prices being in the range of $395-405/mt CFR.
Similar to last week, SteelOrbis sources are united in their belief that May scrap prices in the US are likely to decline. Factors contributing to this prediction include ongoing soft flat rolled steel prices, declining finished steel lead times, and the continuing declines in ex-US scrap cargo sales prices into Turkey. Sources polled said they are pegging the market at down $30-50/gt across the board. The May buy-cycle is expected to start next week.
SteelOrbis has learned that the current price for Mexican domestic shredded scrap is now MXN 10,100/mt ($561/mt), compared to MXN 9,900/mt ($537/mt) on April 14. Additionally, HMS I/II scrap prices are being heard at MXN 8,650/mt ($481/mt), compared to MXN 8,300/mt ($450/mt) on April 14.
Domestic scrap prices in Germany have generally moved up during April with the support of lower scrap supply. It is observed that higher grades have been in greater demand as compared to lower grades, and so the price increase for higher grades has been larger than the increase for other grades. Additionally, E1 grade scrap, which also largely goes abroad, has indicated a price decrease in April. Market players believe there is some room for local European scrap prices to move down in May. One sub-collector said, “There is no positive expectation for Turkey’s scrap demand. On the contrary, the pressure on scrap prices is rising. I expect local European scrap prices to move down by at least €20/mt in May.” According to the latest data provided by BDSV, in the first 20 days of April, scrap prices in Germany moved up by €0.2-7.3/mt month on month, except for E1 grades which declined by €7.2/mt during April.
During the past month, prices in the local Polish market for HMS I scrap have moved down to $380-388/mt DAP, from the levels of €405-410/mt DAP. Market players state that the price is expected to move down by €20/mt in Poland during the first half of May. Demand for steel is on the low side. Polish mills’ inventories of finished steel are at high levels. The weak dollar is exerting pressure on the steel and scrap markets in Poland as the construction sector is not performing so well.
Local scrap prices in Italy have softened by €10/mt over the past week amid successive holidays, while players are taking a break from the market. Domestic scrap prices in Italy are expected to decline by €10/mt more in the coming week, according to some sources. The expectations regarding the price trend in May are negative in Italy.
Tokyo Steel, the leading EAF-based steel producer in Japan, announced a larger price cut for domestic scrap procurement on April 25 compared to its previous price cuts. Tokyo Steel’s general range for H2 grade scrap moved down by JPY 1,000-1,500/mt from the levels recorded on April 21 to JPY 47,500-50,000/mt ($354-373/mt), depending on the mill.
Over the past two weeks, Vietnam’s import scrap market has maintained its silence. Domestic scrap prices are found more attractive by Vietnamese buyers. Japanese bulk H2 scrap offers to Vietnam are around at $390/mt CFR in the current week, moving down from $420-425/mt CFR recorded on April 14. Currently, ex-US bulk HMS I/II 80:20 scrap offers are at around $405-410/mt CFR, failing to attract interest from buyers.
Import scrap prices in South Korea have continued to go down this week with the leading steel producer Hyundai Steel announcing another decrease in its ex-Japan scrap bids by JPY 1,000/mt. The main focus of South Korean producers is still on local procurement or buying Japanese scrap at lower prices, while ex-US trading has been halted as US suppliers have not been flexible, at least so far. Hyundai Steel has cut its bid for Japanese H2 grade scrap to JPY 47,800/mt ($356/mt) FOB.
As a result, the SteelOrbis reference prices for ex-Japan H2 scrap have posted a further drop, down by JPY 1,000-3,700/mt over the past week to JPY 47,800-48,300/mt ($356-360/mt) FOB.
Ex-US bulk HMS I offers to South Korea have remained high, at around $430/mt CFR, while bids would be at $400/mt CFR at the highest, according to sources.
The downward trend of Taiwan’s import scrap market has continued this week. “Lots of local mills have massive import scrap arrivals, and so they are reducing their prices and thereby blocking future incoming scrap flow,” a source at a Taiwanese mill reported. This week, offers for ex-US HMS I/II 80:20 scrap in containers to Taiwan have been at $365/mt CFR. The lowest offer levels for Japanese H1/2 50:50 scrap by bulk to Taiwan are now at $380/mt CFR.