· Over the past week, the uptrend of Turkey’s import scrap market has slowed down as buyers started to seek to exert pressure on prices after concluding a lot of deals last week. The price increase was 1.53 percent or $4.4/mt week on week for prime HMS I/II 80:20 scrap. The month-on-month price rise is now 14.62 percent. Despite the resistance of mills, prime grade scrap prices have increased to $502/mt CFR in an ex-Polish scrap deal, exceeding the psychological threshold. With the Turkish Central Bank’s decision to cut interest rates to 16 percent, versus 18 percent on Thursday, October 21, the Turkish lira has been hit hard and uncertainty has increased in the Turkish steel market. As a result, the last two trading days were silent in terms of trading for scrap. The week closed with an ex-Venezuela deal priced at $505/mt CFR, which is not considered indicative for Turkey’s scrap market, but signals higher price levels for other regions.
· In the US, the start of the November buy-cycle is less than two weeks away and scrap market players from throughout the US believe that an uptrend is on the horizon. The latest wave of optimism is linked to the news out of Turkey, particularly the ex-Poland cargo closed at $502/mt CFR. Other factors favorably impacting scrap prices include the start of the winter, the approach of the year-end holiday season, the start of the hunting season, and the fact that some mills made smaller purchases in October. Scrap flow in the local US market is decreasing, while some mills are returning to the market after their planned maintenance outages. Some market players state that, if the mills do not increase their prices, scrap yards may not agree to sell.
· Domestic scrap quotations in Germany have indicated a better-than-expected price trend over the month of October, while the Polish scrap market has remained stable in this period. Demand has been strong, while suppliers have rejected lower bids from the mills as the month progressed. This has led to a €20/mt increase in the German market coming closer to the end of the month. Also, German sellers have been focusing on Belgium and the Netherlands in October amid the price rises seen in the export segment. The Polish scrap market has also indicated a slight increase in prices as steel quotations are expected to move up due to the spike in energy costs.
· South Korean mills have once again raised their import scrap prices with deals concluded from Japan, and H2 bid prices have posted sharp increase from last week. Hyundai’s bid for H2 grade has risen significantly by JPY 2,500/mt ($22/mt) to JPY 54,500/mt ($478/mt) FOB from the JPY 52,000/mt ($456/mt) FOB last week, to secure H2 scrap tonnages from Japan as demand from the local market has been strong and exporters have been even more bullish now, asking for JPY 56,000/mt ($490/mt) FOB. Despite the strong price increase in H2 bids, Hyundai has kept its shindachi bara bids stable week on week at JPY 67,000/mt ($587/mt) FOB. Indicative ex-US HMS I scrap prices to South Korea are at $550/mt CFR, versus $540-545/mt CFR last week. Customers consider ex-US HMS I/II 80:20 scrap prices to be at high levels and no new deals have been reported during the week.
· Competition between buyers of H2 in Asia has increased lately. Vietnamese buyers’ target prices were at $530-535/mt CFR for H2 and even touched $540/mt CFR by the end of this week. Japanese sellers have increased offers to Vietnam to $550-570/mt CFR. Offers from the US to Vietnam are heard at $560-565/mt CFR.
Given the continuing imbalance of demand and supply, customers for ex-Japan scrap have had no other option but to increase their bids in order to obtain the required amounts of feedstock. In particular, by the end of the current week a local mill such as Tokyo Steel has been ready to pay for H2 scrap at least JPY 4,000/mt ($35/mt) higher than the major importers of ex-Japan scrap. The SteelOrbis reference price for H2 has been settled this week at JPY54,000-55,000/mt ($472-483/mt) FOB, up JPY 2,000/mt on the low end of the range and up JPY 1,000/mt on the high end of the range over the past week.
The main Pakistan-based rebar mills have hiked their offer prices by PKR 5,000/mt ($29/mt) compared to their previous levels, citing a dramatic increase in power supply tariffs and scrap prices, coupled with the continuing depreciation of the national currency. Meanwhile, offers of shredded 211 scrap of European origin have reached $560/mt CFR, adding $20-25/mt over the past week.
Despite the latest deal for ex-Brazil basic pig iron (BPI) concluded to the US at $500/mt FOB (lower than expected),global BPI suppliers have remained bullish with regard to the future price developments in the segment. The sellers have continued to seek their main support from the limited allocations and the ongoing increases in global metallurgical coal and scrap prices. A few CIS-based BPI suppliers have started to test the water with offers at $600-650/mt FOB Black Sea, though the latest level has been fixed in deals at $530/mt FOB Black Sea, with the material to be shipped to Turkey and Italy, where some demand is seen at the moment. Import activity in China has dwindled to nothing, following the recent developments there.