Turkey’s import scrap market is believed to have finally hit the bottom. After surging sharply following Russia’s invasion of Ukraine, the peak was hit at $658/mt CFR on average for deep sea HMS I/II 80:20 scrap on March 22, and prices have since then been falling as sharply as they increased because Turkish mills decided to stay out of the market. This week, though, new deals have been recorded particularly from the European segment and it was observed that suppliers are now not accepting lower bids from mills. First, in a German deal closed at $455/mt CFR Izmir, sentiment became positive and then more players said they believe that the market had hit the bottom in another ex-UK booking at $453/mt CFR. There have been some rumors of ex-US scrap transactions in the range of $453-457/mt CFR, which have been denied by the buyers and the sellers. At the end of the week, an ex-Belgium scrap deal pushed down European prices a little, though it has not changed the market sentiment. Meanwhile, short sea scrap which had declined significantly below $400/mt CFR for HMS I/II 80:20 scrap the previous week has recovered significantly. Under the current conditions, the benchmark HMS I/II 80:20 scrap in CFR terms has recorded a 0.11 percent increase week on week. The month-on-month decline is now 20.25 percent in the deep sea segment, with prices being in the range of $446-460/mt CFR.
Local US scrap prices are still expected to trend down during next month’s buy-cycle, with sources adding that some now believe that prices could settle down by as much as $50/gt in June. The rationale for this prediction is linked to previously discussed factors, such as still-healthy scrap inflows, a lagging availability of shipping containers to ship scrap overseas, and still-falling export prices. “I think what you’re seeing right now is some lagging activity out of the West Coast export market, falling prices out of the East Coast export market, coupled with the fact that scrap inflows are still coming in, despite yards taking their [peddler] prices down,” a source said. “I really don’t see any problems with prices are coming down because, as long as the yards are making their margins, and they still are, it really doesn’t matter where the prices are,” the source added.
Having recorded significant price increases in April, the local German scrap market has followed the trend of the international market and moved down in May. Despite the fall recorded in May, several market players state that local scrap prices in Germany are far above export quotations, which had collapsed as Turkey remained out of the market for at least seven weeks. The initial expectations were signaling a €50-60/mt decline in May in the local German scrap market, while the reduction is now higher due to some German mills’ efforts to reduce their procurement prices by up to €100/mt towards the end of May.
Domestic scrap prices have fallen further in the Italian market in the past few weeks, owing to low demand from local mills. While the downtrend has slowed down recently, the market has remained weak, sources have underlined. Compared to April's levels, "busheling prices have decreased by about €120/mt, while new scrap prices have declined by about €150/mt," said the manager of one Italian steelmaker, underlining that the gap between high and low scrap categories has returned to historical levels. In the short term, the Italian scrap market should remain weak, as mills are still struggling with their finished steel sales and so their appetite for scrap is going to remain scarce.
As anticipated by SteelOrbis, the local Polish scrap market has moved down sharply in May, following the declining international scrap trend, as Turkey decided to maintain its deep sea scrap purchases at a minimum. The sentiment in the Polish market remains negative for June. As local European scrap prices are still higher as compared to the deals done to Turkey, local producers are expected to seek a decline in prices. During the past month, prices in the local Polish market for HMS I scrap have moved down significantly, by €100-110/mt to the range of €460-470/mt DAP, from levels of €570/mt DAP.
Prices for ex-Japan scrap in both the local and export markets have continued their downtrend. The main EAF-based steel producer in Japan, Tokyo Steel, announced another drop in its local procurement scrap prices on May 25, the seventh correction the company has made in May. The scrap purchase prices of Tokyo Steel were cut by JPY 1,000/mt ($8/mt) for all five assets. Prices for H2 scrap have come to JPY 57,000-58,500/mt ($441-453/mt) depending on the mill. The higher end of the range still corresponds to Utsunomiya Works in the Kanto area. The Shindachi scrap price range of Tokyo Steel has settled at JPY 59,500-63,000/mt ($460-488/mt). All prices are delivered and effective from May 26.
Having refrained from scrap imports for seven weeks, South Korean producer Hyundai Steel returned to the Japanese scrap market with significantly lower bids. It was known that the mill had been satisfying its scrap needs from its domestic market during this period and was expecting a fall in import scrap quotations as a result. Its bid is considered to have been successful, though the producer did not buy all 100,000 mt of scrap in the tender and it has also exerted further pressure on the local Japanese scrap market. Hyundai Steel has decreased its bid for Japanese H2 grade by JPY 12,500/mt or $115/mt since April 7 to JPY 53,500/mt ($422/mt) FOB.
POSCO has also announced its bids for Japanese HS and shredded scrap right after Hyundai Steel, though its prices are slightly higher than those announced by Hyundai Steel. “For now, we are not interested in Russian or US origin scrap. We believe there is some little room for another decrease for Japanese scrap,” a source at a major South Korean producer commented, adding that the assessment for ex-US HMS I is $490/mt CFR Korea for now, a sharp decrease from the $530/mt CFR level which was defined as indicative two weeks ago.
As a result, the SteelOrbis reference price for ex-Japan H2 scrap has declined by JPY 3,000/mt ($24/mt) on the lower end and JPY 1,000/mt ($8/mt) on the higher end over the past week to JPY 53,500-57,000/mt ($421-448/mt) FOB.
In Pakistan, import scrap prices have continued to decline this week. Accordingly, offers for shredded 211 scrap of UK and European origin in containers to Pakistan have been settled at $510-515/mt CFR, down $10/mt week on week, while most customers’ bids have been heard at $500-505/mt CFR level. Meanwhile, some Pakistani buyers have decided to replenish their stocks, though most market participants remain convinced that prices will continue to fall further and, consequently, have taken a wait-and-see position. In particular, after a few deals for ex-UK shredded scrap were signed at $515/mt CFR at the beginning of the week, the material has changed hands at $510/mt CFR, $10-15/mt lower than prices fixed in small trades a week ago.
Trading activity has remained weak in Bangladesh’s import scrap market considering the still low demand in the country and the depreciation of the national currency. Meanwhile, import scrap offers to Bangladesh have remained relatively unchanged over the past week despite bearish sentiments in the global scrap market. In particular, offers for ex-UK shredded scrap in containers to Bangladesh have been voiced at $540-550/mt CFR, the same as last week. Besides, offers for HMS I/II 90:10 scrap from the UK and Ireland have been heard at $520/mt CFR, while ex-Australia HMS I/II 90:10 scrap has been offered at $525/mt CFR. According to sources, however, a few deals for ex-South America HMS grade scrap in containers have been signed at $495/mt CFR this week. Meanwhile, in the bulk scrap segment, no new bookings have been heard so far. The indicative offers for ex-US HMS grade scrap in bulk have been voiced at around $515-530/mt CFR, the same as last week, though with limited offers available.
