After the silence observed in Turkey’s deep sea scrap market, an ex-Europe scrap deal has been disclosed to the market, with a sharp decrease recorded in the price. This sharp decline has surprised market players and interpretations of the current price level differ widely. SteelOrbis has learned that the ex-Ghent, Belgium, cargo was bought by an Izmir-based producer yesterday, June 9. The total tonnage of the cargo is 40,000 mt, while HMS I/II 80:20 scrap was sold at $390/mt CFR. One major European supplier commented on the above deal, stating, “The underlying fundamentals have not changed… Scrap is an elastic material. When the price drops, flow slows. Hence, if this decreasing trend continues, the pressure on scrap flow to yards will also continue.” A Baltic-based scrap seller stated, “After this booking, I am expecting Turkish mills to start another round of scrap transactions.” Turkish mills’ finished steel sales are still on the low side and are not enough to support the current production rates, according to a long steel mill. Also, a flat steel producer added that their position is no longer advantageous, due to the “insufficient end-user demand and still broken supply chains.” The sentiment in Turkey’s import scrap market is still negative, while Turkish mills are expected to exert further pressure on deep sea and short sea scrap quotations after the latest deal. Over the current week, at least six deals have been heard from Romania, totaling approximately 18,000 mt of HMS I/II 80:20 scrap, closed in the range of $375-380/mt CFR Turkey. Today, June 10, it has been disclosed that two new cargoes of Romanian HMS I/II 80:20 scrap have been sold at $370/mt CFR Turkey. Hence, once again short sea sellers are under more pressure to sell to maintain their financial positions. Under the current conditions, the deep sea benchmark HMS I/II 80:20 scrap in CFR terms has recorded a 8.52 percent decrease week on week. The month-on-month decline is now 18.46 percent in the deep sea segment, with prices being in the range of $390-405/mt CFR.
Scrap prices in the US Ohio Valley have finally settled, with some speculating that busheling scrap prices could be in for a sharp correction in July. “The spread between shredded and busheling is still at $200/gt and, if you look at the historical average, that spread is way too big,” a source said. “On one hand, you could argue that maybe the mills want to keep busheling prices higher as a means of keeping [hot rolled coil] prices propped up, but, even with HRC prices coming down, the spread between busheling and [hot rolled coil] still gives mills plenty of margin.” It is also believed that the main reason that busheling prices were only down by $50/gt in the Ohio Valley, as opposed to down by $75/gt as seen in the Southeast and in Chicago, is that two local mills, Delta and North Star, came out at down $50/gt, before Steel Dynamics Inc. (SDI) and DJJ came out at down $75/gt.
The main EAF-based steel producer in Japan, Tokyo Steel, started to cut its local procurement scrap prices on June 6, and continued to cuts its prices in two consecutive announcements made on June 9 and 10. In the current week, prices for H2 scrap have declined to JPY 55,000-56,000/mt ($411-419/mt) depending on the mill. But due to the depreciation of the Japanese yen against the US dollar, the dollar-based prices have declined by $17/mt on both the lower and upper ends.
Also, on June 9, Japan-based Kanto Cheorwon announced a scrap export tender. According to the information from market sources, the highest bid in the tender for H2 scrap was JPY 53,560/mt ($402/mt) FAS. 5,500 mt of H2 scrap changed hands, SteelOrbis has learned. In the Kanto Tetsugen tender in May, the highest bid for 5,500 mt of H2 scrap was at JPY 58,010/mt ($445/mt, with the JPY-dollar exchange rate at 130.3, but suppliers had assessed the bids in question to be too low and decided to refrain from export sales at the time. As a result, between the two export tenders, the price of H2 scrap has fallen by JPY 4,540/mt or $43/mt considering the depreciation of the Japanese currency.
The decreasing trend of Japanese scrap export prices has continued unabated this week. Following the Kanto Cheorwon export tender which recorded a significant decline month on month, South Korean steel mill Hyundai Steel has announced its bids for Japanese H2 scrap, also indicating a reduction. Since South Korean mills consider domestic scrap flow to be healthy, they have been exerting pressure on import scrap quotations. The downward pressure exerted by South Korean mills on domestic and import scrap prices is expected to continue, though the downward trend seems to have started to lose its momentum. As compared to the levels announced on May 25, Hyundai Steel has decreased its bid for Japanese H2 grade by a mere JPY 500/mt to JPY 53,000/mt ($396/mt) FOB, but the depreciation of the Japanese yen has had a big impact on dollar-based quotations, resulting in a $26/mt decline. Also, Hyundai Steel’s bids for Japanese H2 scrap are now slightly lower than the price in the Kanto Cheorwon scrap export tender, which corresponds to JPY 54,560/mt ($409/mt) on FOB basis. On the other hand, offers for ex-US bulk HMS I scrap offers to South Korea are at around $485/mt CFR, while market players believe that workable levels will be around $480/mt CFR Korea for this grade.
Taiwan’s import scrap market has recorded another drop since Monday, June 6, amid the slowdown in the steel industry. “The situation is bad in Taiwan, not as bad as in Turkey obviously, but we see that imports are now at very similar levels to the domestic market, which is interesting since they are usually $20/mt higher than local prices,” a source at a Taiwanese mill commented. While international freight costs to Taiwan are increasing, there is no demand for scrap amid the approaching summer season when trading is on the low side traditionally. “Not only is the scrap price decreasing, prices of billet, rebar and all other steel materials are expected to move down,” the SteelOrbis source reported. Offers for ex-US HMS I/II 80:20 scrap in containers to Taiwan are at $440-445/mt CFR, down $5/mt on the lower end over the current week. No deal has been concluded at this level. According to one market player, “No one is buying scrap right now in Taiwan ahead of the summer lull and the downtrend observed in the international scrap market.” Meanwhile, the workable levels for Japanese H1/2 50:50 scrap by bulk to Taiwan are considered to be below $460s/mt CFR after the Kanto tender closed with a sharp decline yesterday, June 9.
In Pakistan, the rise in offers of shredded 211 scrap of UK and European origin has slowed down this week. In particular, import shredded prices have fallen to $510-515/mt CFR, down by $15/mt week on week. Though some offers have still been heard at $520-525/mt CFR levels. After several deals for shredded scrap were concluded at $515-518/t CFR Qasim at the beginning of this week, the material changed hands at 510/mt CFR. Besides, the main Pakistan-based rebar mills have increased their prices by around PKR 7,000-8,000/mt ($37-40/mt) to around PKR 221,000-224,000/mt ($1,108-1,124/mt) ex-works for 10-12 mm rebar of 60 grade. This move was explained by the dramatic increase in power supply tariffs, coupled with the continuing depreciation of the national currency.
Following scrap bookings for at least 95,000 mt in total, two new bulk scrap bookings were concluded to Bangladesh last weekend, with a slight price decrease. Specifically, two deals for mixed US cargoes in bulk were done at $490/mt CFR for HMS I/II 80:20 and $495/mt CFR for shredded 211 scrap, compared to 505-516/mt in the previous ex-US deals reported last week. The volumes of the cargoes were not disclosed by the time of publication. At the same time, purchases of scrap in containers remained occasional, with prices exceeding offers in bulk. In particular, offer prices for shredded scrap in containers in Bangladesh have been voiced at $545-555/mt CFR, up by $5/mt. Offers for ex-UK HMS I/II 80:20 scrap have been heard at $510-530/mt CFR, with a deal signed in the range in question this week.
