With few deep sea scrap deals confirmed this week, Turkey’s import scrap market continued its downtrend. While Turkish mills are still attracting attention to their relatively empty order books for October, some even voice they may cut their production rates further. On the other hand, several scrap suppliers believe that deep sea scrap prices have already hit the bottom. Some expect prices to move sideways, while others expect a bit of a recovery. SteelOrbis hears that scrap supply on the Baltic side is significantly disrupted because Baltic countries are asked to empty ports for four months to keep coal only during winter. As a result, the deadlock in Turkey’s import scrap market continues. There are significant number of mills stating that they will prefer to produce from billets or slabs, instead of scrap right now. SteelOrbis believes the downward pressure on scrap prices is still there, and a slight room is present for another decline.
Under the current conditions, the deep sea benchmark HMS I/II 80:20 scrap in CFR terms has recorded a 2.38 percent decrease week on week. The month-on-month prices are now 10.86 percent lower in the deep sea segment, with prices being in the range of $342-356/mt CFR.
Scrap market sources from throughout the US are largely mixed when it comes to their predictions for October, as the weight of opposite forces on the market, namely, falling export prices into Turkey and a potential US railroad strike, are still being evaluated. “I know that the exporters are going to take their prices down until the slide in Turkey stops,” an East coast-based source said. “What’s going on with export could absolutely impact [domestic scrap prices] next month.” And while a Chicago-based source said he thinks that “scrap prices can’t fall anymore,” and that he doesn't know what to expect, he believes that “if [prices are limp going into the] fourth quarter, I expect supply to be weak by the first quarter.” Also of note, is that it’s also been heard that mills may try to take prices down again next month, to the tune of down $10-$20/gt. On the other hand, multiple market players have said they’re keeping a very close watch on the potential US freight railroad strike, as this could have wide-spanning implications on the market. One source said he believes that scrap prices will absolutely trend upward next month if there is a rail strike, while another said he too believes a lot of what happens with October scrap pricing will hinge on what happens with the rail unions.
Domestic scrap prices in Italy have mostly softened on the lower end week on week, while in some situations prices are observed to remain stable with a downward movement tendency. “Plants in Italy are producing in an on/off mood, depending on hourly costs of electricity,” a source commented. Scrap contracts made at the beginning of September were almost closed at the same price levels of August but now scrap procurement departments are trying to reduce quotations, mainly Italian rebar producers. It is heard that some of the Italian rebar producers are planning to cut their scrap purchase prices in the coming week. Depending on the material produced by the mills, scrap procurement prices differ by €20-30/mt. “Market is also influenced by the international mood, so if situation gets worse we'll see a worsening also in Italian domestic quotations,” a source adds.
Vietnam’s import scrap market is following the global downward trend, while Vietnamese buyers’ focus has changed once again. “Since scrap prices are falling, we are not interested in closing big bulk deals right now. Instead, we prefer containerized materials,” a source commented. Japanese H2 offers to Vietnam have moved down to $400-405/mt CFR, from $410-420/mt CFR recorded at the end of last week. A bulk HMS I/II 80:20 scrap cargo from the US West Coast has been offered to Vietnam at $395-400/mt CFR. A Vietnamese producer has concluded a deal for ex-US HMS I/II 80:20 scrap in containers at $370-375/mt CFR. Also, weak demand in traditional sales destinations may once again push European bulk scrap sellers to sell to Southeast Asia. The tradable level is assessed at $380/mt CFR Vietnam or even slightly below, taking into account the current collection prices.
As anticipated by SteelOrbis, Taiwanese import scrap market moved down in the current week. The higher allocation from the US side has supported the fall for this segment, while Japanese are taking a step back from exports. It is known that local Japanese scrap market is still strong, though this did not prevent prices to soften at the beginning of this week. Domestic rebar prices in Taiwan are still set to decline, the downward adjustments are expected to start next week and will exert further pressure on import scrap quotations. Over the current week, ex-US HMS I/II 80:20 scrap in containers to Taiwan moved down to $350-360/mt CFR. Prices for Japanese H1/2 50:50 scrap by bulk to Taiwan are in the range of $390-395/mt CFR.
As South Korean steel industry tried to repair the damages resulting from the Typhoon Hinnamnor over the past week, the market was relatively silent in terms of import scrap. Hyundai Steel has not shared any bids for Japanese scrap, but from other mills there was some demand. SteelOrbis has learned that some buyers in South Korea bought shindachi scrap at JPY 58,000/mt ($405/mt) CFR and shredded at JPY 57,000/mt ($398/mt) CFR last week. SteelOrbis understands that domestic scrap prices in Japan are supported by the demand received from Japanese mills. As of today, Japanese FAS based scrap prices are at JPY 51,000/mt ($356/mt) for H2 grades, JPY 54,500/mt ($381/mt) for HS grades and at JPY 53,500/mt ($374/mt) for shindachi grades. As a result, the reference price for ex-Japan H2 scrap has remained stable over the week at JPY 49,000-52,000/mt ($343-363/mt) FOB. Taking the CFR Vietnam offers from the US into consideration, a South Korean source reported that the indications for ex-US West Coast bulk HMS I scrap are at $390-395/mt CFR.