Although Turkey’s import scrap market opened on a positive note and indicated some price increases in the first half of the week, the mood subsequently changed. The price increase was the result of the need in Turkey for relatively quick shipments, for late October and early November. Sellers were not willing to cut prices for this period though at the end of the week the number of offers to Turkey increased. The latest deal was done from the Baltic region at $367.5/mt CFR, not changing the general range but exerting downward pressure nevertheless.
On the other hand, the hike in Turkey’s energy prices is expected to have an impact on production costs for domestic manufacturers. While details are still being evaluated by market players, costs are expected to move up due to this latest development. SteelOrbis has already reported that some Turkish mills have maintained aggressive price policies over the past week and reduced their ex-works rebar prices with discounts. However, demand had failed to improve. Just yesterday, September 29, Turkish mills domestic rebar prices were in the range of $690-700/mt ex-works, but today it is observed that mills are announcing higher levels at $715/mt ex-works. The demand situation remains to be seen and may lead to another quiet period for scrap until a balance is achieved in the steel market.
Under the current conditions, the deep sea benchmark HMS I/II 80:20 scrap in CFR terms has recorded a 5.14 percent increase week on week. The month-on-month prices are now 6.72 percent lower in the deep sea segment, with prices being in the range of $364-372/mt CFR.
Scrap market sources throughout the US continue to report that, while they feel that October prices should remain steady, they believe the market is likely to trend soft. Unexciting export prices coupled with mills’ pending maintenance outages are among the factors placing pressure on scrap prices. “I don’t believe there is any hope of an upside,” a source said, adding that, while the market could get a bump in the winter months, when scrap collection tends to slow, he does not see much upside beyond that. On the other hand, despite lessened inflows into domestic scrap yards, numerous mills still have pending maintenance outages on their books. It is also rumoured that David Joseph Company is already testing offers that are down “between $20-40/gt” from September settled levels.
Over the past week, not much has changed in the local Italian scrap market, though sentiment is a bit better. “A few producers are asking for more scrap this week, but prices have not showed a clear increase,” a source commented. Another source said that average prices did not move except a mere €1-2/mt. Next week, negotiations for October contracts will start in Italy. Some market players believe that there is a possibility of an increase in prices.
The main EAF-based steel producer in Japan, Tokyo Steel, continues to adjust its local scrap procurement prices downwards. The gradual decrease started last week with two separate price reductions, with the third decrease announced on September 28. The latest reduction was JPY 500-1,000/mt, depending on the plant, except for Kyushu where prices were kept stable.
Tokyo Steel’s general range for H2 grade scrap is now at JPY 47,000-50,500/mt ($325-349/mt) depending on the mill.
While import scrap prices in Vietnam have continued to move down over the past week, offers from Japan are once again considered to be attractive by buyers. Japanese scrap export prices are expected to remain under pressure as the domestic flow of scrap in South Korea, the main buyer of Japanese scrap exports, has recovered significantly.
Japanese H2 offers to Vietnam have decreased to $385-400/mt CFR, from the range of $405/mt CFR recorded last week. Meanwhile, Tokyo Bay FAS based prices are at JPY 48,000-50,500/mt ($332-349/mt) for H2 grade scrap, signalling JPY 49,000-50,500/mt ($339-349/mt) FOB for this grade. An ex-Australia bulk cargo for this grade was sold at $385/mt CFR. A Vietnamese producer has bought ex-US HMS I/II 80:20 scrap in containers at $355/mt CFR. An ex-Hong Kong cargo for HMS I/II 50:50 scrap by bulk to Vietnam was offered at $385-390/mt CFR this week.
Major South Korean producer POSCO’s efforts to repair mills impacted by the Hinnamnor typhoon earlier this month continue, while negotiations between Hyundai Steel’s workers and management have failed, leading to a strike. Some market players think that the strike may go on for a long time, if management continues to resist the demands of workers. The two steel producers represent approximately 80 percent of South Korea’s steel production. Under the current circumstances, Hyundai Steel and POSCO have decided to take a break from Japanese scrap this week.
As a result, the reference price for ex-Japan H2 scrap has moved down by JPY 1,500/mt on the lower end and JPY 1,000/mt on the upper end over the past week to JPY 47,000-48,500/mt ($325-335 340-350/mt) FOB.
According to market players, ex-US West Coast bulk HMS I offers to South Korea stand in the range of $405-410/mt CFR.
Given the mounting bullishness in Turkey, new offers for shredded scrap in Pakistan have posted a slight increase this week, after weeks of declines. Specifically, after a few deals for ex-UK shredded scrap in containers were reported at $440-445/mt CFR at the beginning of this week, new import offers of ex-UK shredded scrap to Pakistan have increased to $450-460/mt CFR. According to market insiders, most Pakistani buyers have remained inactive due to still weak demand in the construction sector amid heavy rainfall, with only occasional deals for small batches reported in the market.
New import offers for scrap in bulk in Bangladesh have posted a slight increase this week. In particular, prices for ex-US HMS I/II 80:20 scrap in bulk have increased by $20/mt week on week to $420/mt CFR Bangladesh, while offers for ex-Europe HMS I/II 80:20 scrap have been reported at $415/mt CFR. However, according to market insiders, no deals have been reported so far as buyers’ sentiments are still at $400/mt CFR levels for HMS grade materials. Meanwhile, offers prices for ex-UK shredded scrap in containers in Bangladesh have remained mainly unchanged over the past week, standing at $470/mt CFR, while offers for ex-UK HMS I/II 80:20 scrap have been reported at $450/mt CFR.