Earlier this week, Turkey’s import scrap market started to be characterized by more bearish sentiments, while sporadic deals indicated slight decreases in prices. While supply and demand are still balanced amid another wave of cold weather in the US and the relative stability of the euro-dollar exchange rate, the interest shown by Turkish mills in scrap remained on the low side.
Rumors of two ex-US scrap deals surfaced in the market late yesterday, February 26, with HMS I/II 80:20 scrap prices in the deals at $374/mt CFR, and shredded and bonus grades at $394/mt CFR. However, this information was denied by the seller. Therefore, SteelOrbis’ reference prices for ex-US scrap remain in the range of $370-372/mt CFR, following the revision in mid-week.
Meanwhile, the euro has gained strength against the US dollar, wiping out any room provided by the previous softer exchange rate for sellers. As a result, SteelOrbis hears that offer prices from the EU shared with Turkey have remained strong late this week. A German sub-collector says that scrap flow to their yards is 40 percent lower than usual, creating a disruption in scrap availability, while adding that domestic scrap quotations in the EU are considered reasonable. Sources also report that export yards located in northern Germany have shared bids for HMS I/II scrap at €260-270/mt DAP. An ex-UK/EU scrap seller has reported that there are at least three Turkish steel producers in need of cargoes for March shipment. In the US, the snowstorm hitting the US East Coast is disrupting scrap flow to export yards and reducing incoming tonnages. Under the current conditions, the balance between scrap demand and supply has been maintained and deep sea scrap prices to Turkey may remain stable in the coming week.
Under the current conditions, the deep sea benchmark HMS I/II 80:20 scrap prices in CFR terms have moved down slightly by 0.81 percent week on week. The prices are now 0.94 percent lower month on month in the deep sea segment, with quotations being in the range of $365-372/mt CFR.
This week’s exclusive SteelOrbis survey of US scrap market participants finds most still see March scrap pricing sideways, versus the week-ago calls for sideways to potentially down, as the weather continues to improve, likely boosting the flow of scrap into local supply yards, market insiders told SteelOrbis.
“We’re hearing sideways for March and potentially lower for April,” stated one Detroit-based supplier. “Inflows are starting to really pick up from about two weeks ago when the weather was a complete disaster. Now that we’ve gotten through that, inflows are quite a bit more manageable.”
“There’s lots of sideways talk for March, maybe even down slightly,” added one Midwest mill scrap buyer. “I think inflows are solid, with plenty of material available.”
Based on a current sideways call for March scrap, US Ohio Valley prime busheling scrap could settle near its $30/gt higher February settlement prices at $445-452/gt ($452-462/mt), while March shredded material could finish near its $30/gt higher February settlement prices at $445-450/gt ($452-456/mt). In cut grades, a sideways expectation for P&S scrap near $421-431/gt ($427-437/mt) is likely, following its $20/gt February gain. March HMS, which also rose $20/gt in February, is likely to settle at $385-405/gt ($390-410/mt), scrap insiders told SteelOrbis.
Even though the scrap market in Germany has been characterized by some variety in price trends in February, ex-warehouse scrap prices have maintained quite a consistent rise compared to January. According to BDSV, ex-warehouse scrap prices in Germany have increased by slightly more than €10/mt in February. The E1 ex-warehouse scrap price in February has been reported at €260.7/mt, rising by €11.2/mt month on month.
According to the information gathered by SteelOrbis in the Italian scrap market, the market scenario has remained mostly unchanged this week, with traders waiting for mills to make a move for March purchases. According to reports from both producers and traders, however, Italian mills are not in a great hurry to buy.
The key factors to be considered are mills’ capacity utilization rates - and consequently their level of demand - and the sluggishness of the international market, with Turkey and China still slow due to Ramadan and the recent Chinese New Year holiday, respectively. In addition, mills' margins remain very tight and scrap price increases in January and February do not leave them much room to accept further rises, also considering that the finished steel segment is still bearish.
The leading Japanese EAF-based steel producer Tokyo Steel has increased its local scrap purchase prices in two separate steps as compared to its price levels announced on January 29. Market sources report that there is ongoing support for the upward movement of Japanese prices since availability is scarce while demand from Bangladesh for ex-Japan cargoes is lively.
Tokyo Steel’s general price range for H2 grade scrap has increased by JPY 1,000/mt as compared to the levels recorded on January 29 to JPY 44,500-45,500/mt ($288-294) depending on the mill, while the dollar-based prices have increased by $5/mt over the same period taking the exchange rate into account.
Over the past week, Taiwan’s import scrap market has moved upwards. Market sources report that the number of offers from the US is low, while Japanese scrap prices are considered to be unworkable for now.
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 $317-321/mt CFR to $323/mt CFR. This week Japanese H1/2 (50:50) offers have been in the range of $340-342/mt CFR Taiwan.
Due to the anticipated recovery of steel demand after the Tet holiday in Vietnam, sentiment in Vietnam’s import scrap market is relatively positive. SteelOrbis has heard that buyers remain cautious for now towards import scrap offers as the Vietnamese dong has lost strength against the US dollar from 25,607 to around 26,037.
Ex-US bulk HMS I/II 80:20 scrap offers to Vietnam have moved up by $2.5/mt week on week to $360-365/mt CFR. Meanwhile, workable levels for Japanese H2 scrap in Vietnam are at around $320-325/mt CFR.
Pakistan’s import scrap market has remained under pressure this week, with prices softening further as buyers stayed cautious after their early February restocking, amid liquidity constraints and sluggish finished steel sales. Ex-EU/UK shredded offers have slipped to $378-385/mt CFR Qasim, from $380-385/mt previously. Several shredded scrap deals were reported at $378-383/mt CFR, with a few heard as low as $375/mt CFR. Market sources indicate that tradable levels for shredded have been broadly discussed at $375-380/mt CFR, while buyers have largely resisted $382-385/mt CFR given weak local conditions. Ex-UAE indications have also eased. HMS has been heard at $360/mt CFR, down $10/mt week on week, while a sheared HMS deal was concluded at $355/mt CFR. Fresh containerized offers were reported at $352/mt CFR for mixed HMS/PNS and at $355/mt CFR for sheared HMS/PNS - both 500-1,000 mt lots with 21 free days. In the domestic market, local scrap prices equivalent to shredded are reported at around PKR 136,000-138,000/mt ($487-494/mt) ex-warehouse, down by around PKR 2,000/mt ($7/mt) week on week. Meanwhile, rebar of grade 60 is traded at PKR 225,000-226,000/mt ($804-808/mt) ex-works, largely stable from last week, though overall market activity remains subdued. Market participants expect trading to remain slow in the near term, with a potential pickup closer to post-Eid restocking.