The current week started with news about an import scrap deal done in Turkey before the joint US-Israel attack on Iran, with prices in the deal slightly higher than expected. The attack which began on February 28 has created significant uncertainty in the region. While market sources believe that Turkey has developed some resilience to such developments in the region, there is also increased caution among Turkish steel producers as they wait to see what happens to their previous contracts.
A war in the Middle East typically triggers immediate and far-reaching economic consequences. The most significant impact is a spike in oil and natural gas prices due to fears of supply disruptions, particularly on critical routes such as the Strait of Hormuz. Higher energy costs feed into global inflation, raising production, transportation and food prices. At the same time, supply chains may be disrupted if key shipping routes like the Suez Canal or the Red Sea are affected, increasing freight and insurance costs. Overall, such conflicts tend to slow global growth, increase inflationary pressure and heighten financial volatility worldwide. And most of these indirect impacts felt by players all around the world immediately. Turkish steel intermediates decided to take a step back to monitor the situation but the first question among players was about the length of this war, whether it will be short or long one.
In the middle of the week, there were some successful attempts by Turkish mills to conclude deep sea scrap deals, which ended up in a wider price range for ex-UK/EU scrap prices and a slight drop in the general price range. The depreciation of the euro against the US dollar may provide some support for European sellers in terms of FOB dollar-based prices, though the increasing sea freight and insurance costs are expected to prevent any meaningful drop in ex-EU scrap quotations. In the US, local scrap prices have settled sideways and local scrap demand is lively amid concerns over potential problems in pig iron and DRI imports, sources report.
Today, March 6, sources report that increasing oil prices and the lack of vessels showing an interest in sailing close to the war zone is providing support for deep sea scrap prices. “This market can go either way as we do not know how long the US is planning to continue this war. But if things do not change quickly, there will be a real upward push in the global scrap market. Not that Turkish mills can accept a significant price increase, but we also see that they now need prompt shipments,” a supplier trading from all regions mentioned. SteelOrbis has also heard that some delays in previously contracted cargoes have been experienced this week, accelerating Turkish mills’ demand for prompt shipments. “We know that Turkish mills have not completed their purchases for March shipments, and they need to start buying for April. There is an upward push on scrap due to increasing costs. Not only export prices in the EU but also the middlemen’s costs are rising. Having said that, I do not expect a huge price hike since Turkish mills will not be able to manage such a big increase,” a second supplier said today.
A Germany-based sub-collector agreed with the above comment, adding, “Collection on our side is very slow. Increasing costs are causing a disruption of collection activities. But, also, local scrap prices are very attractive as compared to export yards’ bids. We are selling bonus grades to local buyers at €320/mt DAP, while export yards only pay €285/mt DAP.” The same source mentioned that the rapid increase in natural gas prices in the EU has not had a real impact on producers’ capacity utilization rates yet, but this is inevitable in the coming days. SteelOrbis has heard that the price ideas of buyers and sellers now differ by $10/mt for ex-US scrap cargoes, a difference that cannot easily be negotiated.
Turkish mills’ rebar sales prices have been revised upwards during the week, but it cannot be said that demand has revived. “This is the main problem, but I think that following Ramadan the delayed demand may surface. Of course, it will all depend on the developments in the Middle East and there is no way to tell really,” another supplier said.
Late today, a rumor about an ex-Belgium deal surfaced in the market. The cargo in question was reportedly sold with an average price of $368/mt CFR, indicating approximately $363/mt CFR for HMS I/II 80:20 scrap. As this price has not been confirmed by the buyer or the seller, SteelOrbis has decided to keep its general price range stable for now.
Under the current conditions, the deep sea benchmark HMS I/II 80:20 scrap prices in CFR terms have moved up by 0.27 percent week on week. The prices are now 0.54 percent lower month on month in the deep sea segment, with prices being in the range of $365-374/mt CFR.
March US scrap pricing was expected to settle sideways this week as a result of improved scrap inflows into local collection yards, market insiders told SteelOrbis. “Scrap inflows remain still somewhat constrained in the US Northeast, though they are much improved elsewhere,” remarked one US Midwest scrap insider. “I think pricing will settle sideways for March, especially for Midwest shredded.”
“It sounds like March scrap is sideways,” reported one US Midwest scrap dealer. “It doesn’t seem like much trading has been done though.” Another US Midwest scrap insider commented, “Right now, all indications are for a sideways scrap market for March. Hopefully, we will see [some mills] come into the market [March 4].”
Based on a sideways expectation for March, US Midwest busheling and shredded scrap grades could settle on a delivered to mill basis at $445-455/gt ($452-462/mt), and $445-450/gt ($452-457/mt), respectively. P&S and HMS scrap might settle on a delivered to mill basis at $421-431/gt ($427-437/mt) and $385-405/gt ($390-410/mt), respectively.
The local scrap market in Italy has this week reported strong uncertainty about the consequences of the war in the Middle East, translating as a substantial slowdown in trade and overall scrap price stagnation. According to reports, most steel producers have purchased small scrap quantities at relatively unchanged prices, just down €5/mt or higher by €5/mt. However, the trend remains stable overall and market players are maintaining a wait-and-see stance.
As for Spain, market players have reported stable demand and a failed attempt to decrease prices by steel mills. Currently, scrap purchase prices in the local scrap market in Spain stand at around €305/mt delivered to mill for E1 and €330-340/mt delivered to mill for E40, up by €5/mt and €5-15/mt, respectively, compared to the previous levels reported.
The first rumors in the local German scrap market about March scrap negotiations are indicating possible price stability. Spring is near and the weather is getting better in Germany, and after being especially aggressive in February, it is likely that German mills will want to look for a balance this month or even try to reduce prices a little.
Players’ expectations in the local scrap market in Poland at the beginning of March are quite contradictory for now. A source on the mills’ side said he believes that purchase prices in March will be stable even though they should be lower. “The weather is better in Poland, but people are afraid of dropping prices,” he said. As for exports, the HMS I price at Gdansk port has been lowered to around €272/mt DAP, but one local exporter expects prices to remain stable or to rise again by around €10/mt in March. However, since Turkish mills remain very cautious towards any upward movement in deep sea prices given the outbreak of war in the Middle East and the war’s indirect impacts - and as Polish exporters would not be willing to absorb the higher freight rates themselves - it is likely that scrap exports from Poland will remain sluggish for some time.
The leading Japanese EAF-based steel producer Tokyo Steel has increased its local scrap purchase prices in two steps this week, on March 3 and March 6. The upward revision of prices is the result of the depreciating Japanese yen and also due to the producer’s desire to secure scrap flow to its yards. The general price range for H2 grade scrap is now at JPY 45,500-46,500/mt ($289-296/mt) depending on the mill.
Similar to the international scrap market, the ongoing war in the Middle East is also impacting Taiwan’s import scrap market. While increases in sea freight are causing higher costs for all parties, the number of offers shared with Taiwan remains limited. Local scrap generation was low and some mills ran out of scrap stocks, sources reported.
Offer prices for ex-US HMS I/II (80:20) scrap in containers to Taiwan have increased over the past week from $323/mt CFR to $328/mt CFR. Japanese H1/2 (50:50) offers were in the range of $340-345/mt CFR Taiwan, moving up by $3/mt on the upper end.
Vietnam’s import scrap prices have moved up this week as the international scrap and steel markets have been affected by the outbreak of war in the Middle East.
Ex-US bulk HMS I/II 80:20 scrap offers to Vietnam have moved up by $5/mt week on week to $365-370/mt CFR. Most buyers think that the workable levels now for Vietnamese buyers are in the range of $350-355/mt CFR. Meanwhile, a Japanese supplier managed to sell H2 scrap to Vietnam at $330/mt CFR late last week, $5/mt higher than the anticipated level.
The Tokyo Bay FAS-based prices for H2 grade scrap are currently at JPY 46,500/mt, or $295/mt on dollar basis. The FOB-based export price remains at JPY 47,500/mt ($301/mt) for the grade in question.
Pakistan’s import scrap market has become more volatile this week, with prices showing early signs of firming up after last week’s softer tone. However, the outbreak of war in the Middle East has disrupted trade routes and raised uncertainty over Gulf shipments, prompting buyers to reassess procurement as supply risks mount. More specifically, offers for ex-UK/EU shredded scrap have been heard at $385-395/mt CFR Pakistan, compared to offers at $378-385/mt CFR heard last week. Meanwhile, trade for ex-UAE scrap has effectively come to a halt this week amid the ongoing war, as shipments from Dubai have been delayed and overall scrap market activity in the Middle East has largely stalled. In the meantime, in Pakistan’s domestic market, steel prices have moved upward this week amid concerns regarding scrap shortages and delayed shipments from the Gulf region, with grade 60 rebar now heard at PKR 228,000-229,000/mt ($816-820/mt) ex-works, up by around PKR 3,500/mt ($12/mt) week on week.