With consecutive deals announced over the current week, Turkey has significantly lowered its import scrap prices. The situation in the country has become dire after the price increase announced for industrial gas consumption, and Turkish mills are slowing down their production rates. According to one mill, the capacity utilization rate of the general Turkish steel industry stands at around 50.8 percent. SteelOrbis understands that there may be more mills cutting capacity utilization if steel demand does not show any signs of a recovery. “Under the current situation, we believe there is no rush to buy scrap right now,” an official at a Turkish steelmaker commented. Turkish mills indicate there is also an additional cost when they decide to lower their production rates, but right now demand structure is seriously broken in Turkey. The number of sellers willing to accept lower prices is rising, though it cannot be said that mills and sellers are on the same page. One Turkish steelmaker said, “In negotiations the prices in the minds of the two sides are very different.” Turkish mills are targeting $350/mt and below, while sellers are not willing for now to accept such levels. While scrap sellers are showing resistance to the mills’ desired price levels for scrap, it remains to be seen how long they can hold their ground. Another source at a mill said Turkey will be forced to buy billets and slabs if scrap prices do not decrease to desired [or needed] levels to support production and competitiveness.
In the current conditions, deep sea benchmark HMS I/II 80:20 scrap in CFR terms has recorded a 7.14 percent decrease week on week. The month-on-month prices are now 7.62 percent lower in the deep sea segment, with prices being in the range of $350-365/mt CFR.
Sentiment within the US domestic scrap market has taken a dramatic shift in the past 10 days, as sources close to SteelOrbis say that previous expectations of sideways pricing are now “gone with the wind.” As recently as early last week, nearly all scrap market sources polled said they believed that September prices would likely stay neutral. Since then, key developments have taken place within both the domestic and export markets which prompted many to believe that US mills would try to take prices down in September, and those predictions largely align with what has been happening in the past 24 hours. Settled scrap prices are expected to emerge by midday on Friday.
Over the past week, activities in the Italian scrap market have gradually started to resume. Earlier this week, the Italian steel market was quiet, “We are waiting for the Italian government’s decision regarding help on gas prices. When mills start producing steel again, there will be the right price for scrap,” a source at one mill commented. Last year, Italy bought 40 percent of its gas from Russia, and so the issue is being monitored closely by domestic industries. However, already, it is observed that domestic scrap prices are settling within a narrower range.
Asia’s import scrap market has witnessed a change from a positive to a bearish mood as demand has been hit significantly. With Typhoon Hinnamnor hitting South Korean steel mills’ plants hard, players in the country are now focusing on recovery. While the impact of the typhoon is expected to disrupt crude steel production, the effect on scrap is expected to be negative. Damage at Hyundai Steel’s Pohang plant is reportedly lower than the damage at POSCO. However, the former has not announced new bid prices for ex-Japan scrap. Only one deal to South Korean POSCO for high grade ex-Japan busheling press scrap was done during the week.
In Taiwan, the uptrend of import scrap prices has also come to a halt this week. At first, suppliers tried to increase their prices to Taiwan, but, with the typhoon disaster seen in South Korea, the price levels offered to Taiwan have softened. Also, the allocation offered to Taiwan from the US and Japan has increased. Ex-US HMS I/II 80:20 scrap in containers to Taiwan have been offered at $380-385/mt CFR, posting minimal changes from last week. Prices for Japanese H1/2 50:50 scrap by bulk to Taiwan opened the week at $410-420/mt CFR, down $10/mt from last week. However, they have also failed to maintain their levels and moved down to $395s/mt CFR by the end of the week.
The surprise to market sources has come from the Kanto export tender, which closed with a significant increase in price. The Japanese Kanto export scrap tender has indicated a $43/mt price increase month on month, though overall sentiments and outlook are not so bright at all. 15,000 mt was sold at JPY 51,040/mt ($355/mt) FAS, which is up by JPY 8,979/mt or $43/mt from August, taking into account the exchange rate fluctuations. This price corresponds to JPY 52,040/mt ($362/mt) on FOB basis. The buyer is Bangladesh, with the country among the very few interested in purchases of import scrap at the moment. As a result, the reference price for ex-Japan H2 scrap has increased on the upper end by JPY 2,000/mt over the past week, but, due to the depreciation of the Japanese yen against the US dollar, dollar-based prices have declined by $10/mt on the lower end and are up by $3/mt on the upper end, week on week. LINK
Though overall demand for scrap in Bangladesh has been relatively limited, it has been p strong in comparison to demand from other Asian buyers. Last week, apart from a deal in bulk for 15,000 mt of ex-Venezuela HMS I/II 80:20 signed at $450/mt CFR Bangladesh, another deal for 8,500/mt of ex-Singapore HMS I/II 80:20 scrap was signed at $455/mt CFR. This week, however, there were new offers coming to the country at a lower level. In particular, offers for ex-US HMS I/II 80:20 scrap have been heard at $410/mt CFR, down by $30-40/mt week on week. Container scrap prices in Bangladesh also lost $5-20/mt depending on the grade.
Trading in other South Asian countries - India and Pakistan - has been very very poor. The situation in Pakistan’s import scrap market has shown no big change over the past week, considering that floods and related problems still exist. According to market insiders, most steel mills are closed, while for the last 15 days roads and the railway network have been bloсked. Offers for ex-UK/EU shredded scrap in containers have been heard at $460-465/mt CFR, down by $20-25/mt week on week.
The downtrend of import scrap prices in India has gained momentum over the past week amid global cues and uncertainties over the rebar demand revival following prolonged monsoon rains and floods in some regions, prompting secondary mills to reduce raw material procurements. Ex-EU containerized shredded scrap prices have been reported at $470-475/mt CFR Nhava Sheva port in the west, $5-10/mt lower on average from a week ago, while only one deal for 2,000 mt was reported at $473/mt CFR early this week. By Friday, prices have already been seen at $465/mt CFR.
Tokyo Steel announced two local prices rises this week, with the first announced on Monday and the second on Friday and the total upward revision amounting to JPY 1,500-3,000/mt, though sharp currency fluctuations have offset the rises in dollar prices.
Considering that floods and related problems still exist, the situation in Pakistan’s import scrap market has shown no big change over the past week. Offers for ex-UK/EU shredded scrap in containers have been heard at $460-465/mt CFR, compared to $475/mt CFR at the beginning of the week, and down by $20-25/mt week on week. Meanwhile, according to market insiders, most steel mills have been closed, while for the last 15 days roads and the railway network have been bloсked.
In Bangladesh, import scrap prices have continued to decrease this week, though end-users in the country have been very reluctant to accept the new prices. In the bulk segment, no deals have been reported so far, with new offers coming to the country at a lower level. In particular, according to market insiders, offers for ex-US HMS I/II 80:20 scrap have been heard at $410/mt CFR, down by $30-40/mt week on week. Meanwhile, offers for ex-UK shredded scrap in containers have been reported at $480/mt CFR, down by $5-10/mt week on week, while offers for HMS I/II 80:20 scrap have settled at $450/mt CFR, compared to $460-470/mt CFR last week.