Having started the week with a continuing downtrend, Turkey’s import scrap market has showed a surprising recovery in the second half of the current week. Sellers started to show some resistance to the falling prices, with most European sellers commenting earlier this week that they could no longer accept such levels. Mid-week, the sentiment changed, after the rumours of Turkish mills successfully exporting finished steel to various regions once again supported the market. As of today, July 1, most market players are sure that the uptrend will continue in the coming week. Sentiment in Turkey’s import scrap market is very good and prices are expected to move up further in the coming deals. However, “The situation should be monitored closely by players,” an official at one Turkish long steel mill stated, adding that the rise in scrap prices is not related to direct demand and it may be a temporary surge. Meanwhile, there is an unconfirmed deal in the market at the time of publication, regarding an ex-Belgium booking by an Iskenderun-based mill for 30,000 mt of HMS I/II 80:20 scrap and 10,000 mt of shredded scrap at the average price of $370/mt CFR. This information signals $366/mt CFR for HMS I/II 80:20 scrap. Another ex-European scrap deal is rumoured to have been done for 18,000 mt of HMS I/II 80:20 scrap at $361/mt CFR and 2,000 mt of bonus grade scrap at $381/mt CFR.
Leaving the unconfirmed rumours out of the reference prices for now, the deep sea benchmark HMS I/II 80:20 scrap in CFR terms has recorded a 11.54 percent increase week on week. The month-on-month decline is now 16.57 percent in the deep sea segment, with prices being in the range of $355-370/mt CFR.
As of late last week, scrap market sources throughout the US became increasingly pessimistic regarding where July prices might land. While some speculated that cuts and shred could come down by $20-40/gt, others thought that down $50-60/gt was more likely. Predictions for prime grade scrap also varied, with some thinking that prices would soften by $50/gt, and others citing a belief that down $75-100/gt was more likely. This week, multiple sources close to SteelOrbis have begun to cite chatter out of Chicago indicating that David Joseph will try to take HMS, P&S and shredded scrap down by $50/gt, and busheling scrap down by $100/gt+.
The downtrend in the local Italian scrap market continued in the second half of June, as steel demand has remained on the low side. Some Italian producers are planning to cut their capacity utilization rates, while others are announcing production halts for the holiday season. One Italian producer is expected to stop for three weeks, while another is planning for an eight-week holiday. “In just two weeks, prices have declined by €80-100/mt in Italy. There is no good news for now. Due to the holiday season, we are not expecting demand to recover until late September or early October,” an Italian source commented.
The major EAF-based steel producer in Japan, Tokyo Steel, has announced four consecutive price drops this week. The Japanese scrap market is under pressure amid slower demand received from foreign buyers. One SteelOrbis contact commented, “It is generally safe to say Japanese export quotations have a tendency to move down.” Tokyo Steel’s prices for H2 scrap declined to JPY 52,000-54,000/mt ($385-400/mt) delivered earlier in the week, and then closed the week at JPY 51,000-53,000/mt ($376-391/mt) today. The Shindachi scrap price range of Tokyo Steel has also decreased to JPY 53,000-56,000/mt ($391-413/mt). The lack of demand from South Korea is taking its toll on the Japanese scrap market. It is known that Japanese suppliers are trying to lower their export prices to attract demand, while they have continued to sell at higher levels to domestic mills. Nevertheless, Japanese exporters' offers for H2 scrap are still considered to be high as compared to the competitors.
In June, Vietnamese mills managed to secure several scrap cargoes from untraditional suppliers from the EU, and the Baltic region in particular. The absence of Turkey from the international scrap market has given Vietnam leverage, supported by attractive freight rates. As Vietnam has exerted pressure on its traditional scrap suppliers with the support of the extra tonnages, its scrap import quotations have continued to decline over the past week. Vietnam is still buying scrap from Hong Kong and negotiating with the US, but most players agree that Japanese scrap prices are not workable despite the decreasing trend in Japanese suppliers’ export offers. Following the ex-Hong Kong deal for HMS I/II 50:50 scrap by bulk to Vietnam closed at $405/mt CFR last week, another deal was done from Hong Kong for the same grade at around $362/mt CFR. SteelOrbis has learned that Japanese suppliers’ H2 scrap offers to Vietnam are standing at $405-410/mt CFR, down from the range of $425-435/mt CFR recorded last week. SteelOrbis hears that Vietnamese buyers are bidding for an ex-US West Coast bulk HMS I/II 80:20 scrap cargo at $380/mt CFR.
Due to increasing electricity prices, the summer lull and low demand conditions, Taiwan is showing little interest in scrap imports. Electricity costs have increased by around 50 percent in Taiwan since the beginning of summer and higher costs are causing serious problems for mills. While the number of offers from the supplier regions has also moved down, this is not expected to have a strong positive impact on the market. “A temporary recovery may be observed due to Turkey’s return to the international scrap market, but I think it will not last long,” a Taiwanese mill commented. Offers for ex-US HMS I/II 80:20 scrap in containers to Taiwan have remained in the range of $365-370/mt CFR this week, $10-15/mt lower than the lowest price fixed in a deal at $380/mt CFR last week. Meanwhile, offers for Japanese H1/2 50:50 scrap by bulk to Taiwan have indicated a sharp decline from $435/mt CFR to $390/mt CFR.
The South Korean steel market has been impacted negatively by higher product inventories resulting from the eight days of the South Korean truck drivers’ strike, which began on June 7. Some producers such as Hyundai Steel had announced temporary suspensions of operations. South Korean steelmakers are also mentioning that their local scrap market is falling sharply, while they are not experiencing a similar trend for scrap import prices. While South Korea is still not showing interest in Japanese scrap, it is observed that South Korean buyers have reduced their domestic scrap procurement quotations once again in the current week. A Japanese scrap supplier commented, “In Japan, the domestic scrap market is still kept at high levels as compared with international levels. Of course, the price is going down along with the international market, but a bit slower. So, the price gap between domestic prices and international prices is still huge. However, some domestic mills will cut buying volumes from next month due to decreasing product orders and shortages of electric power in the summer. As a result, we have to watch the demand balance and the market price.” SteelOrbis has learned that Tokyo Bay FOB-based prices for H2 grade are at JPY 50,000/mt this week, declining from JPY 52,000/mt FOB recorded last week. This week’s prices translate to $418/mt CFR South Korea, with $50/mt freight.
As a result, the SteelOrbis reference price for ex-Japan H2 scrap has settled at JPY 46,500-50,000/mt ($342-368/mt) FOB, with the lower end representing Japanese H2 offers to Vietnam.
Higher offers for containerized import scrap have started to emerge in Pakistan this week. The continued increase in import prices has triggered a rise in demand from Pakistani buyers this week. Thus, after a deal for around 4,000 mt of ex-UK/EU shredded scrap in containers was reported at $440/mt CFR, the material changed hands at $450/mt CFR. Besides, offers for shredded 211 scrap of UK and European origin in containers to Pakistan have been voiced at $450-460/mt CFR, compared to $440-445/mt CFR at the beginning of the week and up by $25-30/mt week on week. Meanwhile, offers for ex-UAE HMS grade scrap have settled at $510/mt CFR, up by $20/mt since the beginning of the week.
After prices for containerized scrap tumbled by $65/mt last week, the downtrend has reversed in the Bangladeshi import scrap market this week. In particular, import prices of ex-UK/EU shredded scrap in containers to Bangladesh have been voiced largely at $455-465/mt CFR, up by $5/mt on the higher end of the range week on week, while offers for ex-EU HMS grade scrap have settled at $425-435/mt CFR, up by $5/mt over the past week. According to market insiders, several deals have been signed by small buyers, while, in the bulk segment, the offers were very limited for Bangladesh as most suppliers are waiting to see how the Turkish market will trend. The indicative offers for ex-US and ex-Europe HMS grade scrap have been reported at $400/mt CFR, up by 10-20/mt week on week.