Several market players think that benchmark HMS I/II 80:20 scrap quotations are close to hitting the bottom. One seller stated, “It is unlikely to go below $335/mt CFR in the short term.” According to a US-based source, the collection prices in the country may allow sellers to reduce their prices to $337s/mt CFR Turkey. The situation in the EU is different. Collection prices are not falling in the region, remaining at €280-290/mt DAP Amsterdam, while on rare occasions €270s/mt are also heard. “Most exporters here believe that the year has ended already. They are not planning to sell much in the rest of 2022. We will all plan for 2023,” a sub-collector reported. As a result, European scrap prices are unlikely to follow the lead given by the US and to drop drastically.
Under the current conditions, the deep sea benchmark HMS I/II 80:20 scrap in CFR terms has recorded a 0.52 percent decrease week on week. The month-on-month prices are now 9.71 percent lower in the deep sea segment, with prices being in the range of $325-339.5/mt CFR.
The fate of December scrap prices is “still up in the air,” sources note, adding that lessened steel production coupled with unexciting buyer activity has the potential to push US scrap prices down further.
“[Scrap inflow] is slow, [and the] weather is getting cold, but mill production has dropped into the low 70 percent range so they don’t need scrap,” a source said. “I think they will push it down one more month, run out all of their inventory and restock after the new year when we have a better picture of the economy.”
For example, the American Iron and Steel Institute (AISI) reported that for the week ending November 12, mills capacity utilization rate was recorded at 73.7 percent, against 82.8 percent during the same reporting period in 2021. In terms of the US economic outlook, a mid-2022 CNBC survey of chief financial officers at top US companies found that 68 percent of respondents believe that the US will fall into a recession during the first half of 2023.
The local Italian scrap market has moved down slightly for some grades over the past two weeks. Market sources state that there is no support for prices from the export segment. “We have to understand that there may be a downward correction in the local European market, which would eventually lead to a decline in collection prices,” a source commented. Currently, scrap prices are mostly resisting downward pressure, but, if European steel plants continue their stoppages, prices may soften in the coming period.
The main EAF-based steel producer in Japan, Tokyo Steel, has continued to cut its local scrap procurement prices, announcing a decline of JPY 500/mt for all its plants. The producer was expected to lower its prices further this week as SteelOrbis reported on November 16, and this decrease in the local Japanese scrap market may continue in the coming days since scrap exports are very weak.
Tokyo Steel’s general range for H2 grade scrap is now at JPY 46,000-47,500/mt ($330-341/mt) depending on the mill.
Following the cancelation of Japan’s Kanto export scrap tender on November 9, demand for import scrap in Vietnam and South Korea is still close to zero. Producers in both countries are working with local scrap as they seek to maintain their production rates.
SteelOrbis has heard that Japanese H2 scrap prices offered to Vietnam are at around $380/mt CFR, with no deals closed at this level. Meanwhile, offers for ex-Hong Kong HMS I/II 50:50 scrap by bulk to Vietnam are at around $335/mt CFR.
Over the past two weeks, Tokyo Bay FAS-based prices for H2 grade scrap have decreased to 47,500-48,500/mt ($341-348/mt) FOB for this grade.
The SteelOrbis reference price for ex-Japan H2 scrap has moved down by JPY 5,000/mt on the lower end and by JPY 2,500/mt on the upper end to JPY 45,000-48,500/mt ($323-348/mt) FOB.
No bids from South Korea for Japanese H2 scrap have been announced this week. Some US West Coast suppliers have indicated offers to South Korea at around $375-380/mt CFR. A South Korean source commented, “This level is a bit higher than the current market price.”
Following the sharp price fall observed in ex-US scrap offers to Taiwan at the end of last week, the number of offers from the US has declined sharply. According to one source, “They are monitoring China and see that finished steel and coal prices are recovering, and hence they think quotations will increase next week.”
Offer prices for ex-US HMS I/II 80:20 scrap in containers to Taiwan were at $325/mt CFR until the middle of the week. However, towards the end of the week, they have almost disappeared.
Taiwanese sources state that offers for Japanese H1/2 50:50 scrap by bulk to Taiwan are still at around $360-365/mt CFR, with a mere $5/mt increase observed since the beginning of the current week.
