Turkey has accelerated its deep sea scrap procurements starting earlier this week, with ex-US scrap prices hitting $375/mt CFR. With Turkey's interest in scrap accelerating for August shipment, only one producer has completed its scrap purchases for this term. Some European scrap suppliers have already sold their cargoes for August shipment and they are expected to enter the market with new offers for September shipment. The renewed war between the US and Iran is causing sea freight rates to rise again, sources report. For example, the ex-US East Coast freight rate has gained $5/mt over the past week. The situation is similar in the EU and the Baltic. As the risks of another full-blown military war in the region returns, Turkish rebar traders say they believe the bottom has been reached in the local rebar market. Livelier activity in the local rebar market has also supported positive sentiments in the deep sea scrap segment.
As of late on July 23, five new deals surfaced in the market, with ex-US scrap prices rising a little further. SteelOrbis has learned that an Izmir-based steel producer concluded two ex-US bookings for HMS I/II 80:20 scrap at $375/mt CFR, one for September shipment. Another Izmir-based producer bought another cargo with HMS I/II 80:20 scrap standing at $376/mt CFR, for late August-early September shipment. SteelOrbis' reference price for ex-US scrap has increased by $0.5/mt on average to $375-376/mt CFR as of today, July 24.
A Marmara-based steel mill concluded an ex-UK booking of HMS I/II 80:20 scrap at $368/mt CFR in mid-week. After this deal, SteelOrbis' reference price for ex-UK/EU scrap has been revised to $368-370/mt CFR, moving up by 0.54 percent week on week.
Meanwhile, market sources report that one of the abovementioned Izmir-based producers has concluded a transaction from the Baltic region with HMS I/II 80:20 scrap at $370/mt CFR. While this information has not been confirmed by the time of publication, most sources believe that the deal was in fact done. SteelOrbis' reference price for ex-Baltic scrap now stands at $373-375/mt CFR, revised up in line with the most recently confirmed bookings from other regions.
The possibility of a further increase in prices is the main issue on the minds of market players in Turkey right now. Sources on the US East Coast report that scrap availability is abundant and that no problem regarding supply is expected in the short term. The holiday season in the EU is causing European scrap suppliers to remain silent for now. Turkey's import scrap market was on a downward trend since May 20, starting at $411.5/mt CFR on average, dropping sharply by $47/mt until September 16. So far, only $7.5/mt of this fall has been regained by scrap suppliers. However, this uptrend is a direct correction caused by increasing freight rates after the escalation of risks in the Strait of Hormuz.
Turkish mills' margins remain right, not giving them much room to increase their raw material costs. Despite scrap and steel demand being relatively livelier, Turkish mills are expected to remain cautious towards higher scrap offers in the coming period as they seek to control their cost structure. A significant rise in deep sea scrap prices is considered unlikely.
Under the current conditions, the deep sea benchmark HMS I/II 80:20 scrap prices in CFR terms have increased 2.06 percent week on week. The prices are now 3.12 percent lower month on month in the deep sea segment, with prices being in the range of $368-376/mt CFR.
Expectations for the US ferrous domestic scrap market in August are tepid despite the ongoing boom in the finished steel sector. Contacts report that there are ample amounts of scrap in the market, given that some material has not left the country due to the weak export market on both coasts. Even if some of the material for export is not of the same quality as the material consumed by domestic mills, sources believe an improved export market could lower available supplies.
Ultimately, participants in the US scrap sector believe exporters and domestic mills will keep protecting their margins aggressively, or improving them as mandated under the shareholder system of a public company. Some have noted that some scrap buyers owned by steelmakers will come out every month trying to push prices down regardless of the market environment or whether they believe they will be successful or not.
Ferrous scrap prices along the US West Coast (USWC) were unchanged this week, both on bulk basis towards docks and on containerized FAS port basis, as contacts believe that a possible increase in ocean freight rates thanks to increased uncertainty in the situation surrounding the Strait of Hormuz could tighten exporters' margins. Those exporters now seek to protect their margins even if there have not been reports of higher freight rates from the US West Coast. In the meantime, this is the first in the past nine weeks in which US West Coast containerized scrap prices did not fall. The price of containerized HMS I/II 80:20 remained at $305/mt FAS Long Beach port, while P&S 5ft trended sideways at $320-325/mt FAS, and shredded at $325-330/mt FAS.
US East Coast ferrous scrap prices to the docks remained unchanged on Tuesday this week as exporters weighed the uncertainty in the market caused by the latest developments in the US-Iran war. The possibility that ocean bulk freight rates from the US East Coast could rise soon has some exporters waiting for more clarity (they have already risen to $50/mt CFR Turkey this week). Moreover, some sources on the US East Coast believe the Turkish import market has reached the bottom, adding to the uncertainty that US East Coast exporters are trying to wait out. Boston dock prices fell late last week as they caught up with the declines seen in New York and Philadelphia. HMS I fell by $10-15/gt to $230-240/gt delivered to Boston export yard, while P&S 5ft fell by the same measure to $240-250/gt delivered. Shredder feed dropped by $10/gt to $140/gt delivered.
Mexican ferrous scrap prices for the domestic market trended sideways this week after falling for four consecutive weeks. Some mills dropped their prices by MXN 200/mt ($11.4/mt) across the country, yet most stayed unchanged. Nevertheless, the consensus remains that there is an ample supply of material in all regions, and mills that did not lower their prices are still not receiving material.
In Bajio, scrap prices were also unchanged on all grades. The price of #1 busheling was flat at MXN 6,700/mt ($383/mt) delivered consumer, HMS I prices at MXN 6,100/mt ($349/mt) delivered, while P&S 5ft was sideways at MXN 6,400/mt ($366/mt). Shredded prices were flat at MXN 7,400/mt ($423/mt) delivered, and MST at MXN 5,300/mt ($303/mt) delivered.
The downtrend that had characterized the Italian scrap market over the past two weeks appears to have slowed, with prices stabilizing at the latest levels recorded by SteelOrbis.
According to market sources, the slight increase recorded in import scrap prices in Turkey, as well as signals from producers indicating a halt in the decline of finished steel prices, may suggest that the downward movement in scrap prices has also come to an end.
In light of the above, local scrap prices in Italy have remained at €275-285/mt for E1 scrap, while at €290-315/mt for E3.
After the substantial stability observed in June, the German scrap market recorded a significant decline in July, in line with other European markets. According to sources, most transactions have been concluded with decreases averaging €20-25/mt compared to the previous month.
Seasonal factors prevailed over production dynamics in July, and the inflow of material initially remained stable for most grades, though signs of a seasonal slowdown have emerged during the month on the supply side.
Logistical problems are also persisting, and the low water level of the Rhine has further aggravated the situation making inland shipping rates four times higher compared to normal levels.
According to data reported by BDSV, average ex-warehouse E1 scrap prices in Germany are standing at €252.6/mt in July, lower by €22.2/mt compared to the previous month.
The leading Japanese EAF-based steel producer Tokyo Steel has cut its local scrap procurement prices for Utsunomiya and Tokyo Bay in two steps this week, leaving other prices stable for now.
Currently, Tokyo Steel's general price range for H2 grade scrap has moved down by JPY 500/mt on the lower end as compared to the levels recorded on July 23 to JPY 51,000-54,000/mt ($312-330/mt) depending on the mill. Including the changes in the exchange rates, the dollar-based quotations have decreased by $4/mt on the lower end and by $1/mt on the upper end.
After moving down for weeks, Taiwan's import scrap market has shown strong signs of stabilization amid the renewed conflict in the Middle East. While the international scrap market is showing some recovery in terms of prices, ex-US offers to Taiwan are moving sideways. However, Japanese scrap is still characterized by weakness despite the sporadic offers shared by Japanese suppliers.
Offer prices for ex-US HMS I/II (80:20) scrap in containers to Taiwan have shown signs of stabilization, only losing $2/mt on the upper end and moving to $330/mt CFR, from the $330-332/mt CFR levels recorded last week. Actual prices in ex-US deals are still at $325/mt CFR. Only one offer for Japanese bulk H1/2 (50:50) scrap was shared with Taiwan, with the price standing at $355/mt, $3/mt lower than the previous level recorded two weeks ago.
While ex-US scrap offers to Vietnam have stabilized this week amid rising sea freight costs due to the renewal of the war between the US and Iran, workable prices for Japanese scrap in Vietnam have softened.
Offers from the US West Coast to Vietnam for bulk HMS I/II 80:20 scrap have remained stable week on week at $380/mt CFR. Following the ex-Japan H2 scrap deals done by Vietnam at $365/mt CFR last week, workable levels for this grade are now in the range of $360-365/mt CFR amid dropping local scrap prices in Japan and the lack of appetite in export markets.
In Pakistan, meanwhile, the import scrap market has strengthened over the past week, with buying activity resuming and prices for ex-UK/EU material moving upward amid higher freight costs and renewed uncertainty surrounding Middle Eastern supply routes. Several fresh bookings have been concluded above last week's levels, while sellers have continued to raise their indications. Nevertheless, weak finished steel demand and the ongoing monsoon season are expected to limit the extent of any further price increase.
More specifically, 500 mt of ex-EU shredded scrap were sold at $403/mt CFR Qasim, while 2,000 mt of ex-UK shredded scrap were sold at $403-405/mt CFR Qasim. Subsequently, some negotiations for ex-EU/UK shredded scrap have already been held at up to $410/mt CFR Qasim. Current offers for ex-UK/EU shredded scrap have been heard at $405-415/mt CFR Qasim, compared to $395-400/mt CFR Qasim last week, while negotiable and workable levels have generally been indicated at around $403-410/mt CFR Qasim, depending on shipment timing, tonnage and cargo availability. Meanwhile, UAE origin offers have remained absent during the week, as uncertainty regarding shipments through the Strait of Hormuz has continued to restrict the availability of Middle Eastern cargoes. Consequently, Pakistani buyers have increasingly turned toward ex-UK and ex-EU material.
In Pakistan's domestic market, finished steel prices have increased despite continued weakness in underlying demand. Market participants have continued to describe finished steel demand as weak, with monsoon rains limiting construction activity. As a result, scrap procurement is likely to remain focused mainly on immediate requirements until finished steel sales show a more substantial recovery.
Bangladesh's import scrap market, on the other hand, has shown initial signs of strengthening over the past week, with European containerized scrap offers moving higher and a fresh mixed bulk cargo from Australia being booked. However, purchasing activity has remained limited, as mills have continued to focus on immediate requirements and competitively priced opportunities. Ex-EU shredded scrap in containers has been offered at $400/mt CFR Chattogram, compared to the latest ex-UK indication of around $392/mt CFR Chattogram last week, while ex-EU HMS I/II 80:20 scrap has been offered at $366/mt CFR Chattogram.
As for ex-Australia material, a mixed bulk cargo comprising HMS I/II 80:20, PNS and shredded scrap has been booked at $385-390/mt CFR Chattogram, with the final price varying depending on the grade. Separately, ex-Australia HMS I/II 90:10 scrap in containers has been sold at $360-365/mt CFR Chattogram, while ex-Australia/New Zealand shredded scrap has been offered at around $380/mt CFR Chattogram. Thailand-origin NTP bundles have also been sold at $385/mt CFR Chattogram.
In the domestic market, seasonal rainfall and elevated electricity costs have continued to weigh on construction activity, finished steel sales and mills' margins, keeping scrap procurement focused mainly on near-term production requirements.
