On the first work day of the current week, an ex-EU deal was disclosed to the import scrap market in Turkey, indicating a relatively stable trend in terms of price. There was resistance observed on the sellers’ side, with some mills voicing a potential slight recovery in prices. Accordingly, SteelOrbis believed that the downward pressure on Turkey’s import scrap market had eased a little. Although all will depend on the steel demand received by Turkish mills, below the current price levels, all the other markets are considered to be at parity. Turkish mills have been making inquiries but there have not been many offers in the market, and the existing offers are mostly from the US with price offers above $375/mt CFR. This level seems unlikely to be achieved at once, SteelOrbis believes. European suppliers state that the collection prices in the region are at around €290-300/mt DAP Amsterdam and the Netherlands, though scrap flow is on the low side. Under the current circumstances, European suppliers are not expected to cut their offers to Turkey below $350/mt CFR. SteelOrbis considers that the slightly upward expectation for prices may be short-lived as higher finished steel quotations announced by Turkish mills have not accepted by the domestic market. There was an acceleration in rebar trading before the announcements of interest rate adjustments by the US Federal Reserve and Turkey’s central bank. But since the increases in Turkish mills’ rebar quotations, activity is once again on the sluggish side.
Under the current conditions, the deep sea benchmark HMS I/II 80:20 scrap in CFR terms has recorded a 0.29 percent increase week on week. The month-on-month prices are now 10.6 percent lower in the deep sea segment, with prices being in the range of $344-356/mt CFR.
Predictions for US domestic scrap prices in October have mostly levelled in the past several days, as all sources polled said they believe that prices are likely to trend down by $10-20/gt, depending on the grade and the region. As noted in previous reports, mills’ planned maintenance outages and softer-than-desired US export prices are among the factors that are placing downward pressure on the market. “It sounds like [prices] will be a little bit weaker, but hopefully we’re bounding along the bottom,” a source said, adding he has also heard that there is excess prime grade scrap available.
Domestic scrap prices in local Italian scrap market have mostly remained on a slightly soft trend over the past week. As many Italian producers had announced halts in production, market players are trying to understand if any of them intend to return to the market. According to one source, “The steel industry is in a waiting phase to see what will happen regarding the energy and gas problem. When the situation is understood, then everything will accelerate in the steel industry.” It is observed that European countries are trying to support manufacturing industries with packages and measures against higher energy and gas prices. An Italian source reported that there are several solutions on the table, from a cap on prices for energy and gas to windfall taxes on energy companies which have abnormally high profits.
The anticipated increase in the local German scrap market in September has failed to materialize as several German mills have decided to take a break or cut production rates against higher energy costs. As a result, scrap demand in Germany is lower than expected, while the downward trend in the export segment has not helped either. The increase observed in prices of E40 and E5 grades over the past month was due to the lack of material, SteelOrbis understands. As European steel producers announce their intention to cut capacity utilization rates in the coming month, it is being evaluated whether this may lead to a price decrease in October. The majority of SteelOrbis’ sources think that mills’ production cuts are not enough for prices to decline. “Inflation is too high in Germany. This has not been seen for decades,” a source commented, adding, “The people collecting scrap from the streets are failing to pay their bills, hence they will ask for higher prices in the coming weeks or they will stop collecting.” Some sub-collectors told SteelOrbis that they have covered their sales for 2022 by their sales done in the first eight to nine months of the year, and so they may decide to stay out of the market until the end of the year, only meeting their commitments resulting from previous contracts. Germany-based contacts believe that local scrap quotations will most probably move up in October. The approaching winter, high inflation, rising costs and problems regarding scrap flow are the main reasons for this forecast. According to the latest data provided by the BDSV, in the first 20 days of September local scrap prices moved down by €5.5-10.4/mt for some grades, while they have increased by €7-12.4/mt for others, month on month.
As domestic scrap prices in Poland have moved down just slightly over the month of September, they are considered to have stabilized now. “Prices in our region have changed only a bit,” a Polish source commented. Despite the energy crisis which is strongly felt in the EU region, figures show that industrial production in Poland increased in August, similar to July. The third quarter of the year is expected to indicate an overall positive growth in Poland.
During the past month, prices in the local Polish market for HMS I scrap have moved down slightly to €340-360/mt DAP from the average of €354/mt DAP. “The production cuts in Poland have been slower and more controlled as compared to initial expectations,” according to market players.
Since Poland is highly dependent on coal usage and due to the ongoing energy shock in the region, Polish ports have asked traders to empty ports as much as possible to prepare for coal transportation. According to a Polish source, “This will cause most scrap to stay inland and will exert pressure on local prices.”
The export segment has been exerting pressure on the local Japanese scrap market. Having reduced its price for the first time since August 18 on September 21, the major EAF-based steel producer in Japan, Tokyo Steel, announced two cuts in its local scrap procurement prices this week. Tokyo Steel’s general range for H2 grade scrap is now at JPY 47,500-50,500/mt ($332-353/mt) depending on the mill, while its general range for shindachi scrap is currently at JPY 49,500-52,500/mt ($346-367/mt).
The mood in the Vietnamese scrap market is still cautious as regards any move to increase prices or buy higher tonnages. SteelOrbis observes that the Vietnamese steel industry’s performance is still weak. According to a Vietnamese source, “[Vietnamese] mills have scrap demand but they are targeting lower prices. There are offers of big bulk cargoes from the EU and the US, but mills do not dare to book big quantities at the moment.”
Japanese H2 offers to Vietnam have risen slightly to $405/mt CFR. However, following Hyundai Steel’s cuts in its bids for Japanese scrap, Vietnam now expects lower quotations from Japan.
This week, bulk HMS I/II 80:20 scrap cargoes from the US West Coast have been offered to Vietnam at $390/mt CFR. However, Vietnamese buyers still prefer containerized material as they are trying to avoid paying higher levels due to the slow activity of their steel industry. A Vietnamese producer has received an offer for ex-US HMS I/II 80:20 scrap in containers at $360-365/mt CFR.
Also, European scrap suppliers are still in the Vietnamese market seeking opportunities due to the weak demand in their traditional sales destinations. This week, offers to Vietnam from the EU are in the $390s/mt CFR, but tradable levels are still lower at around $380/mt CFR and below.
An ex-Hong Kong cargo for HMS I/II 50:50 scrap by bulk to Vietnam was offered at $390-395/mt CFR.
Taiwan’s import scrap market has moved down further over the past week, but the allocation particularly in the US segment is still higher than usual. While Japanese suppliers have taken a step back from the Taiwanese market during their holidays, the impact of lower bids from South Korea has not yet been fully felt in Japanese scrap export prices. On the other hand, US bulk offers to Taiwan are still seen, exerting pressure with their higher allocations.
Over the current week, ex-US HMS I/II 80:20 scrap in containers to Taiwan have been at $350/mt CFR. This week, ex-US bulk HMS I/II 80:20 scrap offers have been standing at $390/mt CFR. Due to the three-day long holiday in Japan, Taiwanese sources state that they are not hearing any offers for Japanese H1/2 50:50 scrap by bulk to Taiwan this week.
Major South Korean steel producer Hyundai Steel has returned to the import scrap market with lower price levels for Japanese scrap. While fellow South Korean steelmaker POSCO continues its efforts to repair its mills that were damaged by the recent typhoon, there is the possibility of a strike by unionized workers at Hyundai Steel.
As compared to the levels announced on August 31, Hyundai Steel has decreased its bids for Japanese H2 grade by JPY 1,300/mt or $19/mt to JPY 48,500/mt ($340/mt) FOB. In the same period, Hyundai Steel’s bids for HS scrap have moved down by JPY 1,500/mt or $22/mt to JPY 54,000/mt ($378/mt) FOB.
As a result, the SteelOrbis reference price for ex-Japan H2 scrap has moved down by JPY 500-2,500/mt over the past week to JPY 48,500-49,500/mt ($340-350/mt) FOB. Due to the slight appreciation of the Japanese yen against the US dollar, dollar-based prices have declined by $3-13/mt week on week.
There have been no solid offers from the US to South Korea this week. Taking the CFR Vietnam offers from the US into consideration, indications for ex-US West Coast bulk HMS I scrap are at $385/mt CFR. A South Korean contact stated, “Given Hyundai Steel’s purchase price for Japanese scrap, I would say below $380/mt CFR could be something South Koreans may consider for ex-US HMS I scrap.”
In Pakistan, due to the lack of interest from customers, most offers for scrap have continued to decrease slightly this week. In particular, most import offers for shredded 211 scrap of UK origin in containers to Pakistan fell to $440-445/mt CFR, down by $5/mt over the past week. However, according to Pakistani buyers, several suppliers have been maintaining their offers at $450/mt CFR. Meanwhile, import scrap activity has remained muted due to the continuous slowdown in construction activities caused by recent floods in the county coupled with the currency devaluation and further shutdowns by Pakistani rebar producers.
In Bangladesh, import prices have stopped decreasing and some offers for containerized scrap have even been heard at higher levels this week. Specifically, offers prices for ex-UK shredded scrap in containers in Bangladesh have been voiced at $470-475/mt CFR, up by $5/mt week on week. Besides, offers for ex-UK HMS I/II 80:20 scrap have been heard at around $445-450/mt CFR, compared to $440/mt CFR last week. However, Bangladeshi scrap importers have been showing minimal interest in bookings amid slow demand due to disruptions in infrastructure projects caused by heavy rains.