The positive sentiment in the international scrap market has continued into the current week. As sellers believe their local scrap markets may move up, they are in no rush to share offers with Turkey, while Turkey is still seeking cargoes for January shipment.
Earlier this week, market sources reported that collection prices at EU-based export yards were at €265-268/mt DAP, indicating a €5-10/mt increase week on week. A German sub-collector mentioned that, even at these levels, their margins are not great. “Not only are the margins problematic, but also the quality of the scrap collected in Germany is questionable. Since industrial scrap generation is on the low side, the impurity of scrap is increasing. This may mean that, when December purchases start in the EU, EU-based steel producers will be forced to pay higher levels to find the scrap qualities they need.” Another sub-collector in the region reported that they are expecting December and January prices to be firm, and so they are in no rush to sell to any party, to local producers or exporters. At the end of the week, collection prices at EU-based export yards have reached €270/mt DAP.
Turkish mills are very close to concluding their purchases for January shipments, leaving them some time before starting to buy cargoes for February shipment if they wish to wait. “Turkey needs approximately four to five deep sea cargoes before completing its procurements for January shipment. I do not see a reason for them to quickly start buying cargoes meant for February shipment,” a scrap supplier said today, December 5. Some sources do not agree with this sentiment, citing the low scrap inventory levels in producers’ yards. “This uptrend will not stop before Turkish mills halt transactions for a while,” a source at a mill added. The rapid increase in the US East Coast freight rates is attracting attention, leading US suppliers to increase their offers to Turkey, supporting the current uptrend. The duration of the increasing trend in the deep sea segment will depend on Turkish mills’ decision, though for now another slight rise in prices may be expected since there is still some need for scrap cargoes for January shipment.
Under the current conditions, the deep sea benchmark HMS I/II 80:20 scrap prices in CFR terms have moved up by 1.54 percent week on week. The prices are now 3.42 percent higher month on month in the deep sea segment, with prices in the range of $358-368/mt CFR.
While monthly scrap trade is not expected to conclude in the US until at least December 5, December scrap pricing is likely to settle sideways to at least $20/gt ($20/mt) higher as inventory of shredded scrap supply is reported low and the effects of the cold and snowy weather are expected to continue to reduce inflows into local collection facilities, market insiders told SteelOrbis this week.
“To me it appears that the market is up $20/gt and shred might be up more as shred feed is very minimal,” reported one Midwest-based scrap supplier, adding, “Gerdau down south is up $20/gt across the board which makes me think that shred is probably going to have the highest demand in snowy regions.” He continued, “Peddlers are not coming in [to the yards] because of the weather. Cold weather is having a big impact on retail scrap flows in snow belt regions, plus export is seeing better demand. Tomorrow, temperatures are expected to drop to 11 degrees [Fahrenheit] in northeast Ohio.”
“Shred is up $20/gt, but other grades are not yet finalized,” said still another Midwest mill-based scrap buyer. While other grades remained up in the air as of press time, a developing consensus for the week seems to indicate a mostly sideways sentiment, though some insiders on December 4 cautioned that the amount of sideways scrap available to mills might be limited.
Based on a $20/gt ($20/mt) increase in Midwest shredded scrap pricing, the grade is seen settling at $385-390/gt ($391-396/mt), while busheling scrap is currently assessed sideways to potentially higher at $385-395/gt ($391-401/mt) on delivered to mill basis. Ohio Valley HMS grades are expected to settle sideways to up for December near $315-335/gt ($320-340/mt), while P&S scrap, which settled flat in November, could settle sideways to higher near its November settled prices at $351-361/gt ($357-367/mt), scrap insiders told SteelOrbis.
Although rumors of possible upward adjustments in the Italian scrap market have circulated this week - mainly due to the rebound in the international scrap market and especially in Turkey - and to reduced supply compared to last month, Italian mills have not made any official changes to their scrap purchase price lists.
Considering the scrap price increases granted in November, Italian mills are now seeking to keep their purchase prices stable for December, also because, according to sources, their scrap warehouses are well supplied, and they are in no rush to buy.
In the domestic scrap market in Italy, the price ranges within the HMS category are at €265-280/mt for E1 and €290-300/mt for E3.
Discussions about how the scrap market will trend in Germany in December have started to be heard this week. After the slight rises recorded in November which were substantially caused by higher demand from scrap exporters, low scrap availability and domestic mills’ attempts to compete for scrap, views in the local scrap market in Germany are now divided.
On the one side, scrap sub-collectors are seeking to raise their sales prices further in this month’s contracts, considering that there have been no changes in scrap availability. At the same time, reports of higher scrap purchase prices from local mills are circulating in the market, and some sources have reported unofficial increases by €8-10/mt. This, however, does not apply to all producers, which means that scrap purchase prices will only be increased by those who have a real need to buy.
Over the past week, Taiwan’s import scrap market has been characterized by silence. First Japanese sellers, then US-based scrap suppliers took a step back and refrained from offering scrap to Taiwan, as the price ideas of buyers and sellers diverged. Market sources report that the margins for rebar sales in Taiwan are quite low and domestic mills are focusing on local scrap purchases.
Over the past week, the few offer prices shared for ex-US HMS I/II (80:20) scrap in containers were at $300-305/mt CFR as compared to last week’s $296/mt CFR. Having shared offers for Japanese H1/2 (50:50) scrap bulk cargoes at $315-318/mt CFR last week, Japanese sellers took a step back from the Taiwanese market this week.
Vietnamese steel producers’ demand for scrap has remained on the low side over the past week, despite scrap suppliers’ firm price offers. Market sources report that steel demand in Vietnam remains sluggish, curbing steel mills’ willingness to build up scrap inventories.
Ex-US bulk HMS I/II 80:20 scrap offers to Vietnam have remained unchanged this week in the range of $350-355/mt CFR. Vietnam’s Japanese H2 scrap purchases have been closed at $325-330/mt CFR over the past week, indicating a $2.5/mt rise on average week on week.
The Tokyo Bay FAS-based prices for H2 grade scrap have remained stable over the past two weeks at JPY 43,000/mt ($277/mt), up by $3/mt on dollar basis. The FOB-based export price remains at JPY 44,000/mt ($283/mt) for the grade in question, up by $2/mt.
Import scrap prices in Pakistan have continued to fluctuate within a narrow range this week, reflecting a market lacking a clear direction. Buying sentiment has remained weak, with mills only making small purchases to cover immediate needs due to concerns about demand and tight liquidity. At the same time, both local scrap and rebar prices have fallen sharply over the past two weeks, adding further pressure to sentiments in the import market. More specifically, this week most offers for ex-EU/UK shredded scrap in containers have dropped to $355-360/mt CFR, versus $353-355/mt CFR two weeks ago. Besides, according to sources, customers’ bids have been voiced at $350/mt CFR. Meanwhile, offers for ex-UAE HMS grade scrap have settled at $335-337/mt CFR, compared to $338-343/mt CFR two weeks ago. Offer prices for shredded scrap from the UAE have settled at around $360/mt CFR, the same as two weeks ago. According to sources, with demand subdued and cash flow strained, mills are operating at below 40 percent capacity. Purchasing activity is restrained, with buyers avoiding major restocking and covering only immediate requirements.