Contrary to the end of last week, Turkey’s import scrap market is closing this week with a sharp decline. Staying relatively stable over the past week, a last minute ex-Scandinavian booking has been disclosed to the market, rumoured to have been done on Wednesday, August 31, with HMS I/II 80:20 scrap standing at $386-388/mt CFR. The details of the deal have not been shared by the time of publication, but most players believe that the deal has been done. Previously, ex-Baltic scrap prices were at $398/mt. This recent price fall is not a surprise, as Turkey’s steel market is facing a big change on the cost side. One steelmaker commented today, “It is impossible to produce steel with the current input costs, particularly after the rise in natural gas costs. We all see that demand is very low right now both in the local and export markets.” Higher costs caused mills to increase their rebar quotations yesterday, but SteelOrbis observes that it is unlikely that prices will hold their ground. A scrap seller said, “How can they sell at these price levels? They were already struggling…” SteelOrbis also hears that there are some sellers in the market seeking opportunities to close deals, mainly from the Baltic and the US. According to another seller, “Deep sea scrap prices are set to decrease, but I think Turkey’s need for prompt shipments will prevent short sea prices from going down much.”
Under the current conditions, the deep sea benchmark HMS I/II 80:20 scrap in CFR terms has recorded a 2.41 percent decrease week on week. The month-on-month prices are now 9.22 percent higher in the deep sea segment, with prices being in the range of $375-395/mt CFR.
In the past several weeks, sources close to SteelOrbis were relatively uniform in their belief that local scrap prices in the US would trend sideways in September. This was also the prevailing belief as of late Wednesday afternoon, as most sources said they believed prices would neither go up nor down. Today, however, after David Joseph Co. and at least one steel mill sent out a rash of order cancellations, many believe that prices are now likely to soften. A source said he also thinks that the cancellations were sent out in anticipation of lower scrap prices in the upcoming buy-cycle. Whether prices stay sideways or trend down, another source said, "is today's big unknown." The September buy-cycle is not expected to start until Tuesday of next week, after the close of the Labor Day Weekend holiday period.
The local Polish scrap market moved sideways over the month of August. Market players state that sentiment in the market is very mixed. As Polish steelmakers continue to produce as much as they can amid their expectations of a cut in natural gas supply by Russia in winter, finished steel demand is not very high. A market player commented, “Last month, the problem was electricity prices, now it is natural gas. Production costs are rising with each day and producers are afraid of the winter.”
During the past month, prices in the local Polish market for HMS I scrap have moved sideways at €354/mt DAP on average.
In the local Italian scrap market, players indicate that producers should calculatye the very high cost of energy and then it is possible to see how much steel they will produce. “Then the right price of scrap can be seen,” an Italian source commented, with another adding, “We'll update next week. We’ll understand the trend I hope within the end of next week. There are forces in opposite directions currently in the market.” Hence, the local Italian scrap market is still moving sideways in a large price range, which will be settled next week.
On August 29 and 31, the major EAF-based steel producer in Japan, Tokyo Steel, announced two separate increases for its local scrap procurement prices. SteelOrbis hears that scrap demand in Japan is also rising, while scrap prices in the region are supported by the inquiries received from abroad.
Tokyo Steel’s general range for H2 grade scrap is now at JPY 46,000-49,500/mt ($332-357/mt) depending on the mill.
Meanwhile, Japanese export scrap prices have continued to move up. As of August 24, Kanto Bay FAS prices for H2 scrap are in the range of JPY 48,000-50,000/mt ($346-361/mt), corresponding to JPY 49,000-51,000/mt ($353-368/mt) FOB.
Vietnam’s import scrap prices have moved up once again over the past week, but steel prices are not moving in the same direction. Some Vietnamese mills have low scrap inventory levels and so they are forced to pay higher levels for import scrap. The most recent ex-Japan H2 scrap cargo was bought at $412/mt CFR Vietnam, up from $398-405/mt CFR last week. There is a rumour that a Vietnamese producer concluded a deal for ex-US West Coast bulk HMS I/II 80:20 scrap cargoes this week at $435-440/mt CFR.
The reference price for ex-Japan H2 scrap has increased by JPY 3,000/mt ($14/mt) on the lower end due to the higher prices coming from Vietnam and by JPY 3,500/mt ($17/mt) on the upper end due to South Korean mills’ bids to JPY 49,000-50,000/mt ($351-358 /mt) FOB.
South Korean mills are trying to secure import scrap tonnages as scrap flow in their domestic market remains on the slow side. As SteelOrbis mentioned in its previous reports, the long-standing downward trend in the local South Korean scrap market has impacted suppliers, who are now asking for higher levels. As a result, South Korean producers are increasing their bids for Japanese scrap, while they are also focusing on alternative suppliers such as Russia.
As compared to the levels announced on August 24, Hyundai Steel has increased its bids for Japanese H2 grade by JPY 3,800/mt to JPY 49,800/mt ($359/mt) FOB
Additionally, two South Korean mills have concluded deals for Russian A3 scrap, with a total of 40,000 mt bought at $425/mt CFR.
During the past week, import scrap offers to Taiwan have continued their uptrend. However, it is observed that the pace of increase of US origin scrap prices is far slower than that of Japanese scrap prices.
Early this week, there were some deals for ex-US HMS I/II 80:20 scrap in containers to Taiwan at around $375-380/mt CFR, similar to the offers SteelOrbis reported on August 26. Today, September 2, offers for ex-US HMS I/II 80:20 scrap in containers to Taiwan are at $385/mt CFR and above.
In the current week, offer prices for Japanese H1/2 50:50 scrap by bulk to Taiwan have moved up by $25-35/mt from $385-395/mt to $420/mt, both CFR.
The Pakistani scrap market has been depressed due to heavy rains and the floods in the country. The indicative offer levels for ex-UK/EU shredded scrap were settled at $480-490/mt CFR at the beginning of this week, though by the end of the week market insiders have reported new offers at $465/mt CFR. At the same time, trade activity has been close to zero, as, according to market insiders based in Pakistan, there is a state of emergency for businesses due to the devastating flash floods which have washed away roads, homes and crops, leaving a trail of deadly havoc across the country.
In Bangladesh, import offers for containerized scrap have decreased this week, while offers for scrap in bulk have remained mainly unchanged with buyers negotiating purchases of new cargoes. In particular, offers for ex-US mixed cargoes for shredded and HMS grade scrap have remained at $450/mt CFR, the same as last week. Meanwhile, according to market insiders, one ex-South America cargo for around 15,000 mt scrap is under negotiation at $450/mt CFR. At the same time, trade has remained muted in the containerized segment this week. Offer prices for ex-UK shredded scrap in containers in Bangladesh have been voiced at $485-490/mt CFR, compared to $510/mt CFR last week. Offers for ex-UK HMS I/II 80:20 scrap have been heard at $460-470/mt CFR, down by $5-15/mt over the past week.