With Turkish mills covering a lot of ground in their import scrap purchases for February shipments, there is increasing resistance from the mills to higher offer prices or also to current prices. SteelOrbis believes that Turkish mills have concluded at least 22 deep sea scrap deals and now have enough time to exert some pressure on prices in the remaining deals to be done for shipment in late February and early March. Meanwhile, sellers’ expectations of a firm price trend have not changed given ongoing high collection costs and slow scrap flow to their export yards. Against this backdrop, Turkey’s import scrap market has started to move sideways this week.
Turkey’s latest scrap purchase from the US West Coast was closed at a significantly lower price level, raising questions of whether this would increase the downward pressure on deep sea scrap prices. It was already observed that Turkish mills were resisting previous levels, though sellers were also standing firm, keeping their offer price levels relatively stable. However, another scrap booking from the US, this time from the East Coast, was shared with market intermediaries, with the deal done at a stable price, easing any uncertainties regarding the market trend.
A German sub-collector stated that they have sold a large part of their inventory to an exporter at €280/mt DAP, reporting that the higher end of the €275-285/mt DAP collection price range is disappearing. “There are not many exporters paying €280/mt and higher left in the market. We hear another €5/mt decline may be seen at export yards. Local EU-based mills are also failing to compete with exports currently. A small decline can also help them [EU-based producers] too,” he reported. It is clear that Turkish mills will try to exert pressure on deep sea scrap prices in the coming period. How much of a decline they can achieve depends on the stance of sellers. “If sellers panic and the number of offers shared with Turkey increases, there is potential for a small decline in prices,” a seller said.
On the last day of the week, the number of available offers to Turkey has increased. The latest deals in Turkey’s import scrap market are indicating $369/mt CFR for ex-UK/EU HMS I/II 80:20 scrap and $375-377/mt CFR for ex-US scrap. Hence, deep sea scrap prices have moved sideways over the past week.
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 2.69 percent higher month on month in the deep sea segment, with quotations being in the range of $368-376/mt CFR.
For a second straight week, US domestic scrap prices for February delivery were expected to settle sideways to potentially $20/gross ton (gt) higher, market insiders told SteelOrbis in an exclusive weekly survey of market participants.
And, as steady to higher scrap prices for a third straight month seemed more imminent as monthly scrap negotiations for February draw nearer, a developing forecast for abnormally cold and snowy weather across nearly half of the US late this weekend could further trim stocks of US scrap at supply yards as well as further complicate deliveries, insiders said.
“With shredded scrap, inbound flows will slow way down causing shredders to springboard prices if this cold front stays in place for a week or so,” remarked one US Midwest scrap supplier to SteelOrbis. “Flows already are low, but it’s going to just get harder to maintain inventory.”
According to short-term weather forecasts, the approaching winter storm, currently developing over the US West Coast, is expected to affect the transport of steel and scrap in more than 35 states, many of which could see accumulations of more than a foot of snow. Characterized by forecasters as a storm of “high impact and long duration”, significant ice accumulations across the US South as far as Texas are expected to result in significant road closures, potential power outages, and dangerous conditions, they said.
“If the weather gets as cold as predicted, it will force us to shut all of our trucks down,” the scrap insider added, noting that extreme cold weather below 15 degrees Fahrenheit causes diesel fuel in truck fuel tanks to gel, as paraffin wax crystallizes, clogging fuel lines.
“We’re hearing sideways currently for February scrap grades from the mills, but, dealers are still trying to ride the December-January optimism into February,” said another US mid-continent scrap dealer. “We’re hearing sideways all day long,” commented one mill-based scrap buyer to SteelOrbis. One New York state-based scrap supplier said, “We’re expecting to see possibly up $15-20/gt across all grades.
The Italian scrap market has remained rather quiet this week, although some slight upward corrections in average scrap prices by around €5/mt have been reported for some scrap categories.
Supported by the upward pressure in the market, local Italian scrap traders have been seeking increases of €5-10/mt, especially sellers of higher quality scrap such as busheling (E8) and prime busheling (E8C). On the producers’ side, on the other hand, scrap demand is good and partly covered by imports, but several sources have reported that they are doubtful regarding the enthusiasm shown by traders.
Also in Spain, some upward pressure has been reported in the local scrap market, but no further price increases have been confirmed.
Lower scrap availability in the local German market has caused ex-warehouse prices to increase in the first month of the year.
Moreover, according to what has been reported by local sources, scrap purchase price increases by mills have been recorded all over Germany, in the range of €10-15/mt.
Despite the higher levels registered in the German scrap market in January, the economic and industrial scenario in Germany remains fragile. Market players remain cautious, but a slight optimism in terms of better demand is emerging in European steel markets.
Having said that, the increases observed by BDSV in the first 20 days of January are in the range of €7.3-15.6/mt, with E1 old steel scrap settling at €249.5/mt ex-warehouse.
As for Poland, higher requests are coming from the local market and so fewer volumes are available for the export market. According to one source, local mills’ scrap purchase prices in January have increased by €15-25/mt depending on the scrap quality.
Over the past week, Taiwan’s import scrap market has continued its upward trend. Both ex-US and ex-Japan scrap offers have increased, though buyers are not willing to pay higher levels for bulk cargoes from Japan. Despite the price increases observed in the local rebar market, demand is lacking to support the scrap segment.
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 $303-309/mt CFR to $310-320/mt CFR.
Japanese sellers’ H1/2 (50:50) offers to the Taiwanese market have also moved up from $314-323/mt CFR to $321-327/mt CFR.
As Vietnam’s demand for import scrap recovers ahead of the holiday season to start on February 17, Vietnamese buyers are also exerting some pressure on quotations.
As the new year starts, ex-US bulk HMS I/II 80:20 scrap offers to Vietnam have down by a $5/mt on the upper end and are now largely at around $350/mt CFR. Meanwhile, Japanese H2 scrap deals in Vietnam were done at around $328/mt CFR, increasing by $3/mt week on week, to drop back to $325/mt CFR late in the week.
The Tokyo Bay FAS-based prices for H2 grade scrap have remained stable since last week at JPY 43,000/mt ($272/mt), $1/mt lower on dollar basis. The FOB-based export price remains at JPY 44,000/mt ($278/mt) for the grade in question, down by $1/mt.
Import scrap prices in Pakistan have shown a slightly firmer trend this week, as exporters have continued to test higher levels. However, buying has remained selective, with most mills still focusing on limited bookings and keeping their price ideas below the levels currently being offered. More specifically, offers for ex-EU/UK shredded scrap in containers have been heard at around $375/mt CFR this week, compared to $370/mt CFR last week, while one trader said that UK-origin shredded has been discussed in a wide range lately, with the lowest level at around $370/mt CFR and the highest up to $385/mt CFR, depending on supply and shipment details. Meanwhile, buyers’ workable indications for shredded scrap have largely stayed at $370-372/mt CFR. According to sources, a few deals have been concluded at $372/mt CFR during the week, up from around $365/mt CFR heard for small lots at the end of last week. In terms of volumes, shredded scrap totalling approximately 3,000-5,000 mt is reported to have been booked during the past week from the EU and the UK, with some cargoes also heard from Bahrain. Market participants have also recalled that, at the end of last week, numerous deals for small quantities were heard at around $365/mt CFR and slightly higher. Meanwhile, offers and indications from the UAE market have remained firm. According to sources, HMS I/II 80:20 from the UAE has been booked at around $356-362/mt CFR this week, compared to offers at around $360/mt CFR heard last week, while tradable levels have been reported at approximately $363-365/mt CFR for PNS and around $365/mt CFR for sheared HMS. Offers for shredded material for ex-UAE/Bahrain have been voiced in the $383-385/mt CFR range, compared to $375/mt CFR heard last week.