Earlier this week, Turkish mills continued to cover their scrap needs for August deliveries. Along with the new deals, there were bookings done last week but shared this week with market sources, all indicating a sideways movement in prices. While some excitement was observed in Turkey’s import scrap market resulting from the upward movements seen in Turkey’s local rebar market as well as from the optimism in Asia, SteelOrbis mentioned that the potential for an increase in scrap prices was limited.
Turkish mills accelerated their scrap procurements as only a limited number of days were left in July and there was a long way to go for producers’ purchases for September shipments. While new deals are mostly done by US suppliers, new transactions have also reduced the high number of offers from the region. The consecutive sales of ex-US cargoes caused a $1/mt softening in deep sea scrap prices, but this was mostly interpreted as a sideways movement. “There is an expectation of an increase in the market, but I do not agree much. An increase of $2-3/mt is not a real one. The recent upward revisions done by steel mills for rebar were triggering this increase for scrap, though Turkish mills will barely succeed in gaining some money now.” Most market players believed that the deep sea scrap market was still within a wide range of $335-350/mt CFR. “There is no push for a sustainable uptrend in the local rebar and import scrap markets. Steel demand is very low, especially for exports,” a source from a mill commented.
As of July 24, the Central Bank of the Republic of Turkey (CBRT) cut its policy interest rate by 300 basis points, lowering it from 46 percent to 43 percent. The CBRT also reduced the overnight lending rate from 49 percent to 46 percent, and the overnight borrowing rate from 44.5 percent to 41.5 percent. The cut was anticipated for weeks. Over the past week, the Turkish lira has lost strength against the US dollar from 40.20 to 40.48. While this move is expected to impact the local steel market positively, market sources are not sure it will be enough to create significant momentum in the market. Increased import billet offers have curbed Turkish mills’ interest in semis and may lead them to show more interest in scrap in the coming period. Turkey has closed few deals for September shipments and buying some cargoes before Europe leaves the market for the August holidays may provide some support for prices.
Under the current conditions, the deep sea benchmark HMS I/II 80:20 scrap prices in CFR terms have moved down by 0.22 percent week on week. The prices are now 0.73 percent higher month on month in the deep sea segment, with prices being in the range of $340-346/mt CFR.
The market outlook in the US for August scrap pricing continues unchanged for a third week at sideways to July settlements, though new threats on July 9 by US President Trump to impose 50 percent tariffs on Brazilian pig iron could cause a scrap price hike next month, US market insiders told SteelOrbis.
Recent estimates put US imports of Brazilian pig iron for US steel production at around 100,000 mt per month. Insiders say that, if that supply is unavailable due to the proposed 50 percent tariffs by the Trump administration, US mills will have to buy more domestic scrap.
US domestic mill insiders cautioned recently that a failure by the Trump administration to insert a carve-out for pig iron exports from Brazil could cause US scrap prices - specifically prime and shredded scrap grades - to rise next month. Cut grades are still seen sideways, they said.
“We’re looking at sideways for August scrap now, though tariff decisions that take effect on August 1 could define differently,” hinted one Midwest scrap insider. “I’m hearing sideways again for August and up in September potentially,” said another New York State-based scrap dealer. “We have been hearing sideways to $10/gt up,” said yet another Midwest scrap insider.
New July data about scrap prices in the local German market in July showed an average decline of €15.02/mt. E5 scrap marked the sharpest decline, whereas E40 scrap indicated the softest decline. This drop is slightly sharper than SteelOrbis’ previous forecast of a decline by €10-13/mt month on month. The E1 scrap reference price has been recorded by BDSV at €238.4/mt ex-warehouse. The situation is stable on the export side, keeping HMS I/II prices unchanged at €250/mt DAP compared to the last few weeks.
Scrap prices in the local Polish scrap market have declined in July. Currently, sources have reported lower levels by at least €10/mt compared to the previous month, with prices standing at around €260/mt, around €240/mt, and around €265/mt, respectively, for HMS I, HMS II, and bonus grades. As for exports, collection prices at yards for HMS I scrap have been reported in a range of €255-260/mt, up by around €10/mt compared to last week.
The local Italian scrap market has remained totally silent in the past week. No price changes have been recorded, while traders have completed their last deliveries before the summer closures and mills have no need to buy. Scrap prices in the Spanish market fell by around €20/mt overall between the end of June and mid-July. As far as the local market is concerned, the latest prices recorded by SteelOrbis are €270/mt delivered for HMS (E1) and €305/mt delivered for shredded scrap (E40).
Import scrap offers shared with Taiwan this week have gained some strength, though Taiwanese buyers are showing resistance.
Over the past week, the number of offers for ex-US HMS I/II (80:20) scrap in containers to Taiwan has remained scarce. The offer prices have declined by $3/mt on the lower end to $294-300/mt CFR. Offered prices for Japanese H1/2 (50:50) scrap bulk cargoes have moved up over the past week from the range of $308-309/mt CFR to $312-320/mt CFR.
As the monsoon season continues in Vietnam, taking its toll on steel demand and construction activities, interest in scrap has remained on the low side. As finished steel demand in Vietnam is also slow, a significant recovery in scrap demand is not expected in the short term.
Over the past week, offers for Japanese H2 scrap to Vietnam have moved down by another $5/mt to $310-315/mt CFR. Meanwhile, ex-US bulk HMS I/II 80:20 scrap offers to Vietnam are still at around $335-340/mt CFR, while workable levels remain at $335/mt CFR.
The Tokyo Bay FAS-based prices for H2 grade scrap are still at JPY 40,500/mt ($274/mt), up by $2/mt as compared to the levels recorded last week.