Earlier this week, recent deals indicated that Turkish mills’ strategy of holding back in order to curb the upward trend of deep sea scrap prices was relatively successful.
In the following days, an Iskenderun-based producer concluded an ex-Belgium deal, for 32,000 mt of HMS I/II 80:20 scrap and a total of 8,000 mt of shredded and bonus grade scrap at the average price level of $374/mt CFR. This cargo indicated that the HMS I/II 80:20 scrap price remained at $369/mt CFR, unchanged as compared to previous ex-EU scrap bookings. As a result, SteelOrbis did not change its reference prices for ex-UK/EU scrap which stand at $368-369/mt CFR.
This week, German sub-collectors reported that scrap flow to their yards has not improved and that the cold weather in the region is negatively impacting availability. Collection prices at EU-based export yards have declined by €10/mt to €265-270/mt DAP, with the euro-dollar exchange rate moving from 1.19 to 1.179 week on week. The depreciation seen in the euro may give some room to exporters to reduce their offers to Turkey, but it is a very small window considering that collection prices were higher just a week earlier. The same is seen in the US, while local US scrap prices are set to increase during the February buy-cycle.
The prevailing expectation regarding Turkey’s import scrap market is that prices have little room to soften, despite Turkish mills’ considerably narrowed margins. It is also clear that, unless local rebar prices or demand in Turkey recover in the coming period, Turkish mills will resist higher offers received from the scrap supplier regions. SteelOrbis hears that US scrap sellers are now offering at $380/mt CFR to Turkey, while some European offers are now at $375/mt CFR, with both open to negotiation. These offers signal that deep sea scrap prices are likely to remain firm and stable for now.
Under the current conditions, the deep sea benchmark HMS I/II 80:20 scrap prices in CFR terms have moved down slightly by 0.13 percent week on week. The prices are now 2.06 percent higher month on month in the deep sea segment, with prices in the range of $368-375/mt CFR.
On the heels of continued record cold weather and amid reports of scant mill inventory, US domestic ferrous scrap prices are likely to trade at least $30/gt higher this month, continuing an upward pricing trend that began three months earlier in December, market insiders told SteelOrbis this week.
Following on recent record snowfalls across more than 30 states affecting more than 200 million Americans, this week’s unseasonably low temperatures and spotty snowfall reports are making the transport of scrap a higher priority, insiders said. Key scrap transportation routes like rivers and roads continue to be affected, they said, while demand for trucking assets to move scrap remains at a premium.
Even in markets as far away as the US West Coast, February scrap prices are heard at $25/gt premiums.
“Shredded scrap is up $30/gt at [Gerdau’s’] Cartersville,” said one Midwest scrap supplier as trade for obsolete grades HMS and P&S began in earnest on February 4. “The market appears to be coming together at plus $30/gt across the board,” said another insider to SteelOrbis later on the same day. Another scrap insider reported additional sales by suppliers to Midwest mills at plus $30/gt.
If February buy-cycle scrap settled prices begin to be reported on February 6 or at the latest early next week as expected, a $30/gt February scrap price increase would mean that US Midwest shredded scrap values have increased by nearly 16 percent since finishing at $385-390/gt ($391-396/mt) at December settlement. Over the same time period, US Midwest busheling scrap will have increased 12.5 percent, SteelOrbis data show. HMS and P&S grades will have risen more than 17 percent and nearly 16 percent, respectively.
After the announcement of an Austrian producer of a scrap purchase price increase of €15/mt for both old scrap and new scrap, a couple of local mills in Germany have decided to increase their scrap purchase prices. One mill in the eastern part of Germany has increased its scrap purchase prices by €25/mt for all categories, but it is likely that their previous level was too low compared to the market average and now they are adjusting. Another mill in the northwest of the country has increased its scrap purchase prices by €15/mt for new scrap and by €20/mt for old scrap.
Scrap scarcity is also weighing on the Polish market, where mills are buying every available tonnage at higher levels. According to the latest market information, scrap exporters in Poland are willing to pay around PLN 1,050/mt (around €248/mt) DAP for HMS I, but a source has confirmed that at the moment there are “no volumes to be bought”.
According to the latest information collected by SteelOrbis, the scrap prices in the domestic market in Italy that were reported last Friday, January 30, have recorded increases at the start of the new week for some scrap categories and some steel producers, but the average price ranges are lower than indicated.
While no one expects scrap prices to fall in February, mills are pointing to a roll-over in prices, while traders believe that the upward pressure on prices has not yet ended and they expect further upticks of between €5/mt and €10/mt. On the other hand, steel producers are quite determined not to agree to further increases in February, and Italian mills would even try to seek a price reduction of €5/mt. Finally, E1 scrap prices stand at €280-300/mt, whereas E3 scrap prices stand at €305-320/mt, with even higher peaks. Prices include delivery and exclude VAT.
Over the past week, Taiwan’s import scrap market has continued its upward trend despite the slower trading seen in the local rebar market. The increased Japanese scrap offers have failed to find buyers in the market, while ex-US scrap has achieved higher price levels once more.
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 $312-320/mt CFR to $317-321/mt CFR. Actual prices in ex-US deals have moved up from $312-314/mt CFR to $316/mt CFR. This week, Japanese H1/2 (50:50) offers have been in the range of $330-335/mt CFR Taiwan, as compared to the $321-327/mt CFR reported two weeks ago.
As mentioned by SteelOrbis last week, Vietnamese steelmakers have been facing higher scrap price offer levels from the US West Coast. The positive sentiment surrounding the local US scrap market, which is expected to move up by at least $20-30/mt during the February buy-cycle, is supporting the offers shared by Asian suppliers.
Ex-US bulk HMS I/II 80:20 scrap offers to Vietnam have moved up by $10/mt week on week to $360/mt CFR. No deal has been done at this level this week. Meanwhile, Japanese H2 scrap offers to Vietnam have increased by $5/mt this week to around $340s/mt CFR. No new deal has been heard. Sources report that HS grade scrap offers to Vietnam have been at $365/mt CFR in the current week.
The Tokyo Bay FAS-based prices for H2 grade scrap have remained stable since last week at JPY 43,000/mt ($274/mt), $2/mt higher on dollar basis. The FOB-based export price remains at JPY 44,000/mt ($280/mt) for the grade in question, up by $2/mt.