Turkey’s import scrap market has seen silent activity this week as Turkish mills are now considering their strategies towards high scrap prices, mostly seeking ways to lower their production rates. Some mills have quietly planned maintenance works, while others are considering cutting shifts. The low spread between import scrap prices and local rebar prices is attracting attention, raising questions whether alternative raw materials may help provide support for Turkish mills. However, business on the import billet side has remained quiet since the prices offered by most suppliers are above buyers’ expectations and, moreover, the cargoes are mainly available for late March and April shipments, from Asia in particular.
The fundamentals in the deep sea scrap supplier regions provide strong support. The US market is under significant pressure due to the disruptions caused by the recent snowstorms. Scrap availability aside, transportation systems have also been impacted by the cold weather, SteelOrbis understands, raising expectations for a scrap price increase in the February buy-cycle. In the EU, while market sources report that a slight decrease in collection prices has been sought by buyers, the euro-dollar exchange rate hitting 1.19 allows no room for suppliers to drop their offers to Turkey.
While a rumor of an ex-US scrap deal surfaced yesterday, January 29, reported to be concluded by an Iskenderun-based producer for HMS I/II 80:20 scrap at $377.5/mt CFR, barely $1.5/mt higher than the previous booking from the US, this information was denied by all parties at the time of publication. Market sources report that there were offers from the EU segment at around $375/mt CFR, but no deal has been reached at this level and mills are unwilling to pay such levels for now. It is observed that some Turkish mills have preferred to increase their domestic scrap procurement prices instead. Demand in the local Turkish rebar market is stagnant this week, with some traders reporting they have never seen such a silent January in terms of demand. “We know that January is a slow month due to winter, but especially in the Marmara region we are experiencing unprecedented sluggishness in demand,” a Marmara-based trader commented today, January 30.
Under the current conditions, the deep sea benchmark HMS I/II 80:20 scrap prices in CFR terms have moved sideways week on week. The prices are now 2.2 percent higher month on month in the deep sea segment, with prices being in the range of $368-376/mt CFR.
For a third consecutive week, US domestic scrap prices for February delivery are forecast to potentially trade higher, market insiders told SteelOrbis in an exclusive weekly survey of market participants. With February largely staged to be the third straight month of domestic scrap price increases, next month’s buy-cycle trade action could be driven higher as a result of developing logistical issues for inbound and outbound scrap, following continued record cold weather, that was preceded by heavy snowfall and ice across more than 30 US states this past weekend.
Suppliers told SteelOrbis this week available supply “on the ground” in much of the Midwest, Northeast and parts of the Southeast remains snow-covered, making shred processing operations more costly and time consuming. Some buyers have taken to buying scrap specifically in areas not affected by the storm, though many told SteelOrbis transportation of scrap to customers remains tricky.
“Domestically, we’re hearing [February] prices up $30/gt or more,” remarked one Nevada-based scrap supplier. “Right now, domestic scrap is stalled, even into the Southeast. As a result, buyers are having to reach as far south as Texas and Florida for shred supply.”
“Not only are we seeing sharply higher scrap prices, but we’re also feeling it as well,” said another Ohio-based scrap broker. “There’s no question that scrap inflows have diminished to a crawl,” he said. “This will definitely affect the February market. At this point [Jan.28], we’re expecting to see a $20-30/gt increase.”
Ongoing discussions with US mills - many of which predicted an unchanged or “sideways” outcome versus January settled prices over the past several weeks - now find higher pricing more likely.
“I’m thinking up $20 for February scrap,” remarked one US Midwest mill scrap buyer to SteelOrbis.
After a rather slow start to the week, the Italian scrap market has recorded rather significant increases in prices of some scrap categories this Friday.
Although market players were expecting unchanged or slightly higher scrap prices in February at the beginning of this week, today, January 30, some scrap price increases by €10/mt week on week have been recorded for HMS: E1 scrap prices stand at €295-305/mt, whereas E3 scrap prices stand at €320-335/mt or slightly higher. Prices include delivery and exclude VAT.
As usual, the last week of the month is turning out to be very quiet in terms of scrap deals in Germany, as monthly negotiations for scrap purchases in January have already been concluded and it is still early to start discussing February deals.
In the meantime, sources have reported average scrap prices for delivery to mill in January at €270-280/mt for E1, €285-305/mt for E3 and at €295-310/mt for E2/E8.
The leading Japanese EAF-based steel producer Tokyo Steel has reduced its local scrap purchase prices in two regions in two separate steps, as announced on January 26 and 28. The appreciation of the Japanese yen has supported the move despite market sources reporting that scrap availability in Japan has not improved much.
Despite the changes recently announced, the producer’s general purchase price range for H2 grade scrap has remained at JPY 43,500-44,500/mt ($283-289/mt) depending on the mill. The upper end of prices is still represented by Tokyo Bay. Including the changes in the exchange rates, the dollar-based prices have increased by $7-8/mt compared to the levels announced on January 10.
Over the past week, Taiwan’s import scrap market has moved up sharply in actual deal prices. Japanese sellers’ absence from the bulk scrap market has provided support for ex-US scrap prices, as have the dire winter conditions observed in the US.
Offer prices for ex-US HMS I/II (80:20) scrap in containers to Taiwan have increased over the past week from the range of $310-320/mt CFR to $312-320/mt CFR. Actual prices in ex-US deals have moved up sharply from $308/mt CFR to $312-314/mt CFR. With the Japanese yen’s strong performance through the week, Japanese sellers have taken a step back from the market and their H1/2 (50:50) offers to Taiwan have disappeared.
Ahead of the long holiday due to start on February 17, Vietnamese producers are expected to start restocking scrap, though their resistance to higher offers persisted this week. Market sources report that a cautious stance has been maintained by Vietnamese steelmakers, while the fundamentals in the scrap supplier segments have been strengthening.
Ex-US bulk HMS I/II 80:20 scrap offers to Vietnam have remained stable at $350/mt CFR. No deal has been done at this level this week. Market sources report that bids from buyers have softened a little (by around $5/mt) to $335-340/mt CFR. Meanwhile, Japanese H2 scrap offers to Vietnam are at around $330/mt CFR, though there were deals done at around $325/mt CFR earlier in the week.