The Turkish scrap market opened the week with news of several deals from the end of last week, all with stable price trends. However, considering the number of deals, the sentiment in the market changed somewhat against the backdrop of Turkish mills completing most of their purchases for September. The market was expected to remain stable for the short term, with Turkish mills anticipated to take a break from bookings. These forecasts have been realised this week. No new deals, except for older ex-Venezuela deals, were heard. Some short sea scrap bookings are also disclosed, but the most recent ones were from early this week. The only support for Turkey’s import scrap market was the relatively livelier demand for rebar, and it has started to decline too. As a result, some market players believe that Turkish mills will ask for lower prices when they return to the market and that they may stay away in the coming week. However, sellers think that collection costs do not provide much room for a sharp decline in deep sea scrap prices in the future. “Scrap slow is very slow in the EU,” is a comment almost heard from all suppliers. Accordingly, SteelOrbis has kept its reference prices stable in the current week amid the lack of new deals.
Under the current conditions, the deep sea benchmark HMS I/II 80:20 scrap price in CFR terms has recorded a 0.26 percent increase week on week. The month-on-month prices are now 0.38 percent higher in the deep sea segment, with prices being in the range of $387-396/mt CFR.
Although US scrap market players’ predictions for September are largely varied, the prevailing suspicion is that prices will hold at sideways. The rationale behind this thinking is linked to several factors, such as still stable (yet relatively unexciting) scrap cargo sales prices into Turkey, slowed scrap inflows into domestic scrap yards (due to seasonal factors and soft peddler prices), and the fact that mills are not expected to make large-volume buys during next month’s cycle. “On one hand, [scrap] inflows have slowed down based on what happened with pricing this month,” a source said, noting that, in most places, cuts and shred were down $20-30/gt, and busheling fell by an astonishing $70/gt. “On the other hand, there are some [production] outages that are coming up and I don’t think the mills are going to be buying a ton of scrap. I think it’s going to be a wash.” Others feel that prices could come up or trend down. Additional clarity is expected by the end of next week.
With Italy still on holiday, trading in the local Italian scrap market is at very low levels. The only purchases done this week were from alternative suppliers such as Germany, France and Eastern Europe. Some of these purchases indicate a €20-50/mt increase in terms of price, while one mill only accepted a rise of €10-20/mt, SteelOrbis understands. One Italian market player stated, “We can say that domestic trading is absent.”
Italian market players are waiting for the holiday to end to see how the domestic market will react. Natural gas and electricity prices in Italy are also rising, which will inevitably impact on Italian plants’ decisions about production in the coming weeks. “The international scrap market is also a factor to be considered after the holiday as well as the real demand we will face when we return to work,” a source commented.
The major EAF-based steel producer in Japan, Tokyo Steel, has finally announced an increase in its local scrap purchase prices, supporting the idea that Japanese scrap prices in the local and export markets have bottomed out. Tokyo Steel had been cutting its prices gradually since May 6, with the domestic scrap prices of the producer declining from JPY 63,500-65,500/mt to JPY 39,000-42,000/mt from then up to the present. The rise announced by Tokyo Steel was JPY 1,000-2,000/mt effective as of August 19, except at Tokyo Steel’s Tahara and Takamatsu plants. After the increase, prices for H2 scrap have increased by JPY 1,000/mt or $8/mt on the upper end to JPY 39,000-43,000/mt ($288-318/mt) depending on the mill.
The Vietnamese scrap market made a slow start to the current week, as Japan was out for the Obon holidays in August 13-16. Market players seeing the increases in import scrap prices report that the steel market lacks the strength to support such higher prices. As SteelOrbis reported previously, Hyundai Steel has increased its bids for Japanese scrap, making it harder for the Vietnamese to compete. Also, offers from the US are on the high side, very different from Vietnamese mills’ desired levels for this grade. Meanwhile, the local Japanese scrap market is gaining momentum, reducing the possibility of lower-priced offers to Vietnam in the coming days.
Currently, indicative Japanese H2 scrap offers to Vietnam are at $390-395/mt CFR. However, buyers’ bids are around $370s/mt CFR. Meanwhile, US suppliers’ offers for ex-US West Coast bulk HMS I/II 80:20 scrap cargoes are at $410-435/mt CFR to Vietnam.
As a result, the reference price for ex-Japan H2 scrap has increased by JPY 3,000/mt ($16/mt) on the lower end due to the higher bids coming from South Korea and by JPY 1,500/mt ($5/mt) on the upper end due to the upward pressure observed both in Vietnam and Taiwan to JPY 42,500-44,500/mt ($315-330/mt) FOB.
Over the past week, US scrap suppliers have continued to keep their distance from Taiwan as they find the current price levels in the country low. A source at a Taiwanese mill stated that ex-US offers to Bangladesh and India are at excessively high price levels, and so Taiwanese mills are also not bidding for ex-US cargoes. However, they have found themselves an alternative source, namely, Canada. Meanwhile, Japanese scrap offers to Taiwan have decreased slightly week on week, while bulk scrap quotations are considered to be more attractive as compared to US origin containerized material. As the US has not really been offering to Taiwan since the middle of last week, no deals have been done. Early last week, the price of ex-US HMS I/II 80:20 scrap in containers to Taiwan was at $338/mt CFR. However, as there is an increasing trend observed in offers from the US to Southeast Asia, the price targeted by the US in Taiwan would be much higher than buyers can accept. Meanwhile, a Taiwanese mill has received offers from Canada for HMS I/II 80:20 scrap in containers at $360/mt CFR. In the current week, prices for Japanese H1/2 50:50 scrap by bulk to Taiwan have indicated a slight decrease on the upper end from $375-390/mt to $375-385/mt in offers, both CFR.
Over the past weeks, it has been observed that South Korean steelmakers were mainly working with domestic scrap, with major South Korean mills staying away from concluding import scrap purchases. However, domestic scrap flow in South Korea has significantly slowed down. SteelOrbis understands that South Korean mills will focus on Japanese scrap for now, considering ex-US scrap offers unacceptable. If they cannot find enough volumes from their domestic market or from Japan, they may consider increasing their prices for these segments to secure scrap.
As compared to the levels announced on July 21, Hyundai Steel has increased its bids for Japanese H2 grade by JPY 2,000/mt to JPY 42,500/mt ($314/mt) FOB, with dollar-based quotations moving up by $21/mt. Hyundai Steel’s bids for HS scrap have risen by JPY 3,000/mt or $29/mt to JPY 48,000/mt ($355/mt) FOB. Finally, the steel mill has bid JPY 47,000/mt ($348/mt) FOB for shredded grades and JPY 43,000/mt ($318/mt) FOB for H1/2 grades.
SteelOrbis has learned that US West Coast for bulk HMS I scrap offers given to South Korea this week were at $385-395/mt CFR, indicating a $15-20/mt increase in prices as compared to those shared on August 18.
Import scrap offers to Pakistan have continued to move up at a rapid pace, rising by $15-20/mt week on week, and up by $40/mt since the beginning of August. Specifically, after deals for ex-EU shredded scrap in containers were reported at $490/mt CFR on Friday, August 12, the material has changed hands at $500/mt CFR this week. Meanwhile, offers for ex-UK/EU shredded scrap have settled at $500-505/mt CFR. Besides, offers for ex-UAE HMS grade scrap have been voiced at $525/mt CFR Pakistan, though no sales were reported for ex-UAE scrap in Pakistan as, according to market insiders, “All material is going to India at $500/mt CFR levels”.
In Bangladesh, although most end-users in the country are very reluctant to accept an increase in deal prices amid slow demand, global scrap suppliers have increased their offers to Bangladesh again this week. More specifically, this week market insiders have only reported continuing negotiations for ex-US scrap in bulk at $450-455/mt CFR for HMS I/II 80:20 scrap and at $455-460/mt CFR for shredded scrap. The current average price is $15/mt higher than was estimated last week. Meanwhile, offer prices for ex-UK shredded scrap in containers in Bangladesh have been voiced at around $500-510/mt CFR, up by $10-20/mt week on week, while offers for ex-UK HMS I/II 80:20 scrap have been heard at $470/mt CFR, up by $10/mt over the past week.