Turkey’s import scrap market was mostly silent over the past week as Turkish mills decided to remain on the sidelines while occasionally asking for lower prices from suppliers. European and Baltic-based sellers have been showing resistance and there are not many offers from these regions. SteelOrbis hears that two European suppliers have cargoes on hand but are not aggressively offering them to Turkey. US-based sellers are also waiting for bids from Turkish mills instead of offering their remaining cargoes. The downward pressure on import scrap quotations continues, but the determining factor will be the willingness of US suppliers to lower their quotations. Two traditional sellers of scrap to Turkey are collecting their scrap at €280-290/mt delivered, and so there seems to be no margin for European suppliers to cut their prices significantly to Turkey. “Turkish mills can wait for two to three weeks as they have cut their capacity utilization rates, if they cannot find the lower price levels they desire,” a source commented, adding, “So, their capacities also remain to be seen, but I do not expect European or Baltic-based sellers to offer much lower quotations closer to $300s/mt CFR Turkey.” SteelOrbis hears that Turkey is seeking $330-340/mt CFR for HMS I/II 80:20 scrap in deep sea cargoes.
Under the current conditions, the deep sea benchmark HMS I/II 80:20 scrap on CFR terms has recorded a 4.34 percent decrease week on week. The month-on-month prices are now up 4.6 percent in the deep sea segment, with prices in the range of $345-360/mt CFR.
Scrap market sources throughout the US say they are bracing for an August downtrend, adding that weak export activity, falling dock prices, falling sheet steel prices, and reduced demand from domestic mills (due to planned maintenance outages) are all placing downward pressure on the market. The current expectation is that cuts and shred will come down by $20-30/gt, and that primes will soften by $50/gt. “In the Northeast, flow is still good, but there’s not going to be a ton of demand this month. Steelton is shut down for two weeks for maintenance, Coatesville isn’t really buying from the open market because they’re getting all they need on their long-term contracts, and they get everything else from Cliffs or Ferrous Processing,” a source said. “Gerdau is overflowing with scrap, and the exporters keep knocking prices down.” An explosion that took place at the TimkenSteel Faircrest plant in Ohio earlier this week is also expected to impact August scrap demand.
As the summer holidays start in the EU, the local Italian market has begun to soften. “The recent rise was expected to be temporary anyway. This is not a surprise,” a source reported. Prices have declined by €15-20/mt over the past week on the lower end. “The mills that are taking a break for technical maintenances or due to the summer holidays are lowering their scrap procurement prices and finished steel demand is on the low side, but not all producers are following the same strategy,” one source commented, adding that the producers that received rebar demand last week are keeping their prices unchanged. As a result, the scrap price range has widened week on week.
Contrary to the rest of the European region, the local Polish scrap market has indicated an uptrend during the month of July amid the restocking of steel and raw materials observed in the country early in the month. Market players state that Polish mills are currently following diverse price policies. Some are trying to lower their scrap procurement quotations, while others are pushing for a rise. According to a source, the main concern in Poland right now is the possible reduction of gas and energy supplies in the coming winter. “Polish steelmakers are afraid of what winter will bring, and so they are trying to replenish their inventory levels before any possible gas and energy cuts,” a source commented regarding the price rise. During the past month, prices in the local Polish market for HMS I scrap have moved up by €14-24/mt to €354/mt DAP on average fixed in a recent deal, from levels of €330-340/mt DAP. Higher grades like bundle scrap are currently at around €402/mt CFR as compared to €340-350/mt DAP, according to sources.
The major EAF-based steel producer in Japan, Tokyo Steel, announced another drop in its local scrap purchasing prices by JPY 1,500-2,500/mt effective as of July 27 and then by JPY 2,000/mt effective as of July 29. After the reduction announced by Tokyo Steel on July 28, prices for H2 scrap had dropped to JPY 39,000-42,000/mt ($288-310/mt) depending on the mill, down by JPY 2,000/mt or $12/mt from July 26.
Meanwhile, Tokyo Bay FAS-based prices for H2 grade were still at JPY 39,500/mt on July 27, equal to JPY 40,500/mt ($296/mt) FOB. As a result, the reference price for ex-Japan H2 scrap settled at JPY 40,500-41,000/mt ($296-300/mt) FOB, with the higher end of the range down by JPY 3,000/mt from last week due to lower bids coming from Vietnam.
While all players in Southeast Asia have focused on the US Federal Reserve’s upcoming interest rate announcement, raw material and steel demand in Vietnam is still sluggish. According to a source, “The anticipated 75 base points of a rise in the US interest rate may make things worse.” Over the past week, Vietnamese buyers achieved lower import scrap prices in deals done from Japan and Hong Kong, while US-based suppliers have taken a step back from the market as they cannot compete with such price levels. One market player stated that there is a 70 percent chance of a further decline in scrap prices, though adding, “Chinese mills are restarting and seasonal demand should be better in September.” Despite some positive signs, the possibility of a downward movement is greater for now. SteelOrbis has learned that an ex-Hong Kong deal for HMS I/II 50:50 scrap by bulk to Vietnam was closed at $360/mt CFR as compared to the level of $383/mt CFR recorded last week. A Vietnamese buyer successfully concluded a deal for Japanese H2 grade scrap at last week’s targeted price of $370/mt CFR towards the end of last week.
Import scrap procurement prices in Taiwan have continued to move down over the past week. Finished steel demand is still on the low side, with some market players describing the situation as “bad”. With the lack of steel demand and decreasing steel prices, Taiwanese mills are in no rush to conclude scrap bookings. Hence, particularly ex-US and ex-Australia scrap offers to Taiwan are now rare. SteelOrbis understands that those sellers have also lost the price advantage to Japanese suppliers who have been cutting their offers to Taiwan for weeks now. “No one is so willing to buy scrap but, now with Japanese scrap quotations declining, we can easily say they are more attractive for a willing party,” a source at a Taiwanese mill commented. As compared to the levels recorded in SteelOrbis’ report published on July 22, the price of ex-US HMS I/II 80:20 scrap in containers to Taiwan has declined from the range of $345/mt CFR to $330-335/mt CFR. Offers for Japanese H1/2 50:50 scrap by bulk to Taiwan have indicated another $20/mt decline from $355/mt to $335/mt, both CFR.
The cautious stance of South Korean mills towards import scrap has continued over the past week, while they have reduced their domestic scrap procurement prices once again. As reported before by SteelOrbis, finished steel demand is on the low side in South Korea and is expected to decline further with automobile producers planning a month-long holiday in August. According to Reuters, “South Korean economic growth unexpectedly picked up in the second quarter as strong consumption amid eased Covid-19 restrictions offset poor exports, supporting the case for further central bank interest rate hikes. However, exports and corporate spending on production facilities slumped amid a slowing Chinese economy and the fallout from the war in Ukraine as well as a global wave of monetary policy tightening to fight inflation.” Having cut its bids for Japanese H2 grade to JPY 40,500/mt ($293/mt) FOB on July 21, Hyundai Steel decided to buy only around 20,000 mt of different grades, including H2 scrap, despite the large tonnages of scrap offered by Japanese suppliers. This tonnage was considered unremarkable by market players. This week, Hyundai Steel has not shared bids for Japanese scrap yet.