The current week has been characterized by relative silence in Turkey’s import scrap market. Although some deals were done, indicating a slight increase in prices, Turkish mills are cautious and are in no rush to conclude bookings at higher levels. According to one Turkish mill, “They are only buying what they need.”
With new deals heard from Europe and the US, Turkey’s import scrap market has returned to the levels recorded in early May. While most players believe Turkey’s economic situation remains uncertain, Turkish mills are also seeking deep sea scrap for June shipment. The current silence in the market is the result of the different price ideas of buyers and sellers, which is pushing scrap prices up slightly.
Today, May 26, another ex-UK booking was shared with the market. An Izmir-based mill has concluded the transaction for 20,000 mt of HMS I/II 80:20 scrap at $378/mt CFR, for June shipment. This price level is similar to yesterday’s ex-Germany booking and is in line with SteelOrbis’ previous price range of $377.5-380.5/mt CFR. Also, the price levels recorded in ex-EU bookings support the idea that ex-Baltic and ex-US scrap suppliers will now ask for higher levels in their offers to Turkey. SteelOrbis has heard that a Baltic-based scrap seller is now asking for $385/mt CFR Turkey for benchmark HMS I/II 80:20 scrap.
Also, an Iskenderun-based producer has concluded an ex-US deal for 14,000 mt of HMS I/II 90:10 scrap at $388/mt CFR, 14,000 mt of shredded scrap at $405/mt CFR and 4,000 mt of bonus grade scrap at $405/mt CFR. According to the information regarding the shredded scrap prices, benchmark HMS I/II 80:20 scrap quotations has increased by $7/mt as compared to the previous deal. The cargo will be shipped in the second half of June.
A major European supplier stated, “The contraction observed in scrap supply is higher than the fall seen in global scrap demand.” Also, scrap flow in the EU is reported to have declined by 45 percent as compared to its usual pace. Suppliers point to slower scrap flow as well as their increasing collection prices. Some scrap sellers also note that the Indian sub-continent has been out of the market for a long while, but will return to the market to replenish its stocks. “LC problems experienced in the region are getting better,” according to a major EU-based scrap supplier. However, all players are aware of the negative news regarding macroeconomics and political uncertainties in Turkey. Turkey will hold the second round of its presidential election on May 28. Depending on the steel demand following the election result, scrap prices will then take shape. Turkey is also expected to start rebuilding its earthquake-hit region. Whether postponed construction activity in other regions of Turkey will start or not remains to be seen.
Under the current conditions, the deep sea benchmark HMS I/II 80:20 scrap price in CFR terms has increased by 2.76 percent week on week. The prices are now 7.52 percent lower month on month in the deep sea segment, with prices being in the range of $378-385/mt CFR.
This week’s survey results regarding the local US scrap market have netted similar responses to last week, with most sources saying they believe the downtrend will vary based on the region, within the range of $20-$40/gt in June. Some players say they feel that June prices should bottom out the market. “Obviously the domestic mills will try to push prices down if there’s no pressure [to stay steady or increase] from export,” a Northeast source added, noting that in his region flows have slowed by 45-40 percent for all grades. A source in the Midwest also said his flows are sluggish, adding that his industrial scrap inflow is down by approximately 50 percent year on year.
SteelOrbis has learned that the current price for Mexican domestic shredded scrap is now at MXN 9,000/mt ($495/mt), compared to MXN 9,700/mt ($528/mt) two weeks ago. Additionally, HMS I/II scrap prices are being heard at MXN 7,800/mt ($429/mt), compared to MXN 8,300/mt ($452/mt) two weeks ago.
As anticipated by SteelOrbis, domestic scrap prices in Germany have generally moved down during May. Despite the lower supply volumes, the slower production rates of German steel mills and the lack of support coming from the scrap export segment have pushed down prices. “Despite the fall in domestic scrap quotations, we think this is not so bad. German mills continue to buy scrap in small tonnages due to the decreasing price trend. They want to stock up a bit,” a collector in Germany said on May 23. For the month of June, market players believe there is not much room for another softening. “Our own collection prices are above €260-270/mt. With the freight to export yards which is around €20/mt, we cannot accept lower than €300/mt DAP to export yards now,” a German sub-collector commented. According to the latest data provided by the BDSV, in the first 20 days of May, scrap prices moved down by €29.7-48.2/mt month on month. Additionally, the year-on-year decrease is now in the range of €97.8-152.6/mt.
With steel production slowing down, the local Italian scrap market has continued its downtrend in recent weeks. Generally, domestic scrap prices have decreased by €25-30/mt in May. SteelOrbis hears that Italian steel mills’ order books are on the low side and only a few sales have been.
As SteelOrbis reported early this week, Taiwan’s import scrap market had reached equilibrium. There were few transactions for rebar earlier, but Taiwan’s steel market has again become silent after a severe price drop across all steel products in China. At the end of the current week, offers for ex-US HMS I/II 80:20 scrap in containers to Taiwan were at $370-375/mt CFR. Japanese scrap suppliers’ offers for H1/2 50:50 scrap by bulk to Taiwan have been at $375-380/mt CFR.
SteelOrbis hears that there is a resistance from South Korean steel mills against current domestic and import scrap price offers. South Korean producers have not shared bids for Japanese scrap this week. Indications for ex-US bulk HMS I/II 80:20 scrap to South Korea stand at $405-410/mt CFR.
For now, the SteelOrbis reference prices for ex-Japan H2 scrap have remained at JPY 47,800-48,300/mt ($341-344/mt) FOB. Due to the depreciation of the Japanese yen against the US dollar, dollar-based reference prices have indicated a $15-16/mt decline week on week.
In Bangladesh, import offers for scrap in containers have remained mainly unchanged over the past week. More specifically, offers for ex-UK shredded scrap have been voiced at $450-455/mt CFR, the same as last week, while offers for PNS scrap from the UK, Hong Kong and Singapore have been heard at $465-470/mt CFR. However, despite stable import offers, the import scrap market in Bangladesh has continued to remain in a lull during the past week given still slow finished steel demand coupled with problems with opening letters of credit (LCs). Meanwhile, in the bulk segment, offers for ex-US HMS grade scrap have been voiced at around $415-420/mt CFR, the same as last week. According to sources, at the end of last week a deal for 32,000 mt in total of ex-US materials was signed at $410/mt CFR for HMS I/II 80:20 scrap and at $415/mt CFR for shredded scrap, while this week no deals have been reported so far.
Scrap trading in Pakistan has remained muted this week, with only some occasional bookings reported given that most regional customers have kept delaying new scrap bookings as the business environment in the finished steel segment has remained unfavourable. At the same time, foreign suppliers of shredded scrap have stopped increasing prices to Pakistan, offering shredded 211 scrap of UK and European origin in containers at $440-445/mt CFR, the same as last week. According to sources, only several bookings have been done at $442/mt CFR.