The mood in Turkey’s import scrap market has changed in a matter of days, supporting the idea that a slight recovery in steel demand may cause a momentary increase in scrap prices, such as was seen just before the Feast of Sacrifice holiday in early July. While no deep sea scrap deal has been concluded since SteelOrbis’ report published yesterday, August 4, two ex-Adriatic deals have been disclosed to the market, supporting the uptrend expectations shared yesterday. Traditionally ex-Adriatic scrap prices are approximately $5/mt lower than the mainstream ex-continental Europe scrap cargoes. Accordingly, ex-Europe HMS I/II 80:20 scrap prices are now at at least $365-370/mt CFR Turkey, also supporting the idea of ex-US scrap offers above $380/mt CFR.
Under the current conditions, the deep sea benchmark HMS I/II 80:20 scrap in CFR terms has recorded a 5.67 percent increase week on week. Month on month, prices show no change in the deep sea segment, still in the range of $365-380/mt CFR.
Scrap market sources from throughout the US have said the market has been quiet, and that, while predictions about where prices could settle are abundant, transactional activity has gotten off to a slow start. At first, SteelOrbis sources indicated they had heard rumors that mills could try to buy primes at down $65-70/gt from July settled levels, adding that they believed that down $50/gt was “in the bag. Today, it’s been confirmed that Delta Steel came out at down $20/gt on cuts and shred, and at down $70/gt on busheling. If accepted by the market, this would bring Detroit-area busheling prices to $420/gt, $10/gt less than shredded scrap prices. August settled scrap prices throughout the US are still expected to be known by end-of-business on Friday, August 5.
In the current summer holiday season when Italian mills carry out maintenance works, steel and raw material demand in Italy is on the low side. However, the change in the international scrap market is attracting attention in the country as well as the disruptions observed in the local EU scrap market. The initial expectations of a downtrend in the local Italian scrap market have changed over the past week. Currently, market players believe prices may stabilize with potential to move up, particularly for higher volumes. “However, there are no big volumes available in the market due to the summer holidays,” a source stated. Nevertheless, as one market intermediary stated, “There will be no real market starting from next week to the end of August.”
Slow steel demand conditions in Vietnam continue but Japanese scrap sellers have once more caught up with their competition in terms of prices. As a result, there is some interest in Japanese scrap imports in Vietnam. A Vietnamese source stated, “Demand for raw materials as well as for steel is very slow, while purchases are few.” Currently, Vietnamese mills are focusing on Japanese scrap, stating that the most attractive price is coming from Japan. A buyer successfully concluded a deal for Japanese H2 grade scrap at $350/mt CFR, which is $20/mt lower than $370/mt CFR recorded last week. Meanwhile, US suppliers are back with offers to Taiwan, with ex-US West Coast containerized HMS I/II 80:20 scrap offers at $340/mt CFR. As a result, the reference price for ex-Japan H2 scrap has declined by JPY 1,800 on the lower end and by JPY 1,500/mt on the upper end to JPY 38,700-39,500/mt ($290-296/mt) FOB, with dollar-based prices maintaining their strength with the help of the appreciating yen.
While the downtrend of Taiwan’s import scrap procurement prices has continued over the past week, the number of import scrap offers to the country has shrunk. According to a source, “Some market players believe that the Japanese scrap price may have hit the bottom and other suppliers are watching the situation in Turkey closely.” As the sentiment in the international scrap market quickly became positive in the second half of the week, Taiwanese buyers are also monitoring developments. As compared to the levels recorded in SteelOrbis’ report published on July 29, the price of ex-US HMS I/II 80:20 scrap in containers to Taiwan has declined from the range of $330-335/mt CFR to $320-325/mt CFR. In the current week, prices for Japanese H1/2 50:50 scrap by bulk to Taiwan have indicated another decline from $335/mt to $327/mt, both CFR.
The downtrend of the local South Korean scrap market has continued over the past week. While scrap flow to mills’ yards has slowed down a little due to the summer holidays, South Korean mills still have enough inventories on hand to exert pressure on both import and domestic scrap quotations. “Another decrease in domestic scrap prices is planned for next week,” a source commented. Under the current healthy inventory conditions, South Korean mills are in no rush to conclude import scrap bookings. Japanese scrap prices to the export markets have declined to competitive levels, though the situation in South Korea remains as outlined above. Hyundai Steel and POSCO have not announced bids for Japanese scrap this week. SteelOrbis reported yesterday that Tokyo Bay FAS-based prices for H2 grade translate to JPY 39,500/mt ($296/mt, exchange rate at 133.68) FOB, down by JPY 1,000/mt over the past week. As regards ex-US West Coast bulk HMS I scrap, a source at one of the major South Korean mills stated, “They are definitely not in the market and other mills in South Korea are also unlikely to be in the market.” SteelOrbis understands that South Korean producers’ HMS equivalent scrap price for delivery to mill is around $330/mt, and so it is quite difficult for South Korean mills to approach US material.
In Pakistan, after weeks of declines, new offers for shredded scrap have posted a slight increase this week. Specifically, import offers of ex-UK/EU shredded scrap in containers to Pakistan have increased by $5-10/mt week on week to $460-465/mt CFR. However, most Pakistani buyers have remained inactive due to the still weak demand in the construction sector amid heavy rainfall, coupled with serious problems with opening letters of credit. At the same time, some market insiders have become more optimistic considering the appreciation of the national currency this week.
Import scrap offers to Bangladesh have remained relatively unchanged over the past week, while trading activity has remained weak, with only a few deals reported this week considering the still low demand in the country and the depreciation of the national currency. In particular, several small deals for ex-UK shredded scrap in containers to Bangladesh have been reported at $470/mt CFR, though most offers have remained at $480/mt CFR, the same as last week. Meanwhile, offers for ex-UK HMS I/II 80:20 scrap have been voiced at $455-460/mt CFR, up by $5/mt week on week. Meanwhile, the indicative offers for ex-US HMS grade scrap in bulk have been voiced at around $410/mt CFR, the same as last week. Most customers have remained inactive, though by the end of the week talk about a deal for ex-US HMS I/II 80:20 in bulk signed at $395/mt CFR has been circulating in the market.