Turkey’s import scrap market started the month at a fast pace in terms of deep sea scrap purchases. However, by the middle of this week the number of offers from the deep sea segment increased totaling around ten today, January 14. As a result, Turkish producers have had some space to wait and try to slow down the rising price trend. It is observed that Turkish steelmakers’ production costs are also higher, while their sales to the domestic and export markets are not accelerating. As a result, their focus has turned to short sea scrap, which can provide them with some more time to wait before concluding further deep sea scrap deals. While demand for short sea scrap has accelerated, the same cannot be told for suppliers’ willingness to sell to Turkey as they expect prices to rise further next week. Under the current circumstances, the deep sea HMS I/II 80:20 scrap price is currently in the range of $460-472/mt CFR Turkey, 0.43 percent higher week on week and 0.11 percent higher compared to the same time last month.
US scrap prices in the Ohio Valley and Northeast have settled down sharply, with a $60-61/mt drop recorded when the market settled. The main reason for the decrease in the local US scrap market was considered to be the weakening of finished steel prices. As a result, US producers reduced their scrap purchase quotations to protect their margins.
Even though signs of an uptrend have started to be visible in ex-Japan scrap export prices, local prices are still at a premium to prices overseas. Accordingly, the main EAF-based steel producer in Japan, Tokyo Steel, has decided not to miss the opportunity to lower its production costs. On January 12, the company decreased purchase prices for H2 and shindachi scrap for its Utsunomiya plant by JPY 500/mt ($4.3/mt).
On the same date, prices for Japanese scrap in the latest Kanto export tender increased significantly in line with expectations. The Kanto auctions were canceled for two months in a row in November and December due to low bids. But this time the auction was successful as the mood in the export market has improved and the gap with local prices has narrowned due to a slowdown of demand in Japan. In the tender, the first lot of 5,000 mt of H2 scrap was awarded at JPY 51,010/mt ($442/mt) FAS, while the second one for 5,100 mt was sold at JPY 50,957/mt ($442/mt) FAS.
The SteelOrbis reference price has increased by JPY 2,000-3,000/mt ($17.4-26.2/mt) week on week to JPY 49,000-52,000/mt ($428-455/mt) FOB.
South Korean producers have been increasing both their domestic and import scrap purchase prices over the past week. However, it is yet to be seen whether Japanese suppliers will accept Hyundai Steel’s new bids announced on January 13, as the downtrend in the Japanese scrap market seems to be coming to a halt. As compared to the levels announced on December 23, Hyundai Steel has increased its bid for H2 grade by JPY 2,000/mt ($17.4/mt) to JPY 49,000/mt ($428/mt) FOB. Hyundai’s bids for HS scrap have moved up by JPY 4,000/mt ($34.9/mt) to JPY 58,000/mt ($506/mt) FOB.
While Taiwanese buyers bought some cargoes from the US at the beginning of the week at higher prices, they have made no bookings from Japan as the gap between ex-US and Japanese offers has widened once again. It is observed that Taiwanese buyers are showing some resistance to higher price levels, not accepting Japanese offers in particular. Deals for ex-US HMS I/II 80:20 scrap in containers to Taiwan were closed at $440/mt CFR, up from the $430-435/mt from the levels in transactions last week. Currently, offers from the US for the same grade are in the range of $440-445/mt CFR. Offers from Japan to Taiwan for H1/2 50:50 scrap by bulk have moved up from $480-485/mt CFR to $490-500/mt CFR.
With scrap prices having recovered as of the beginning of this week, there are some new bookings done in Vietnam from various destinations at higher price levels. Vietnamese producers have accepted the levels of $500/mt CFR for ex-Japan H2 scrap, with the price moving up from the range of $485-490/mt CFR since last week as a workable level. Some H1/2 50:50 scrap from Hong Kong has been sold to Vietnam at $490/mt CFR today, January 14. Meanwhile, ex-US HMS I/II 80:20 scrap offers are at $520-530/mt CFR Vietnam.
With buying activity having accelerated lately in Turkey, global scrap suppliers have continued to voice higher prices in offers to the Asian markets, in particular, to Pakistan. However, Pakistani customers have continued just to book material for their urgent needs, being unsure of the future price trend in the global market. On balance, by the end of the current week the shredded 211 scrap of European origin is available at $555/mt CFR Qasim, while ex-US shredded scrap is offered at $550/mt CFR Qasim. Ex-UAE HMS scrap is still possible to buy at $520/mt CFR Qasim, according to sources.
Given the bullish sentiments mounting among global scrap suppliers following bookings done to Turkey at higher prices, Bangladeshi scrap importers have resumed active negotiations. Moreover, most customers have opted to renew their positions now, having concerns that prices will move up further. Overall, scrap offer prices are around $10-15/mt higher than levels in deals two weeks ago. This week, a cargo for ex-Brazil HMS I/II 80:20 scrap has changed hands at $518/mt CFR Chittagong. Offers for ex-Japan H2 scrap have been heard at $530/mt CFR, with no trading heard so far.
Given the temporary withdrawal of offers from Brazilian suppliers due to heavy rainfall in Brazil and the consequent disruption of iron ore mining and pig iron production, major global basic pig iron (BPI) producers have become more cautious in offerings. Rare bookings of ex-Ukraine and ex-Russia BPI have been done to Turkey and South Korea this week, with suppliers seeking to obtain higher prices in coming deals. SteelOrbis’ assessment for ex-CIS BPI prices has increased to $500-510/mt FOB Black Sea, compared to $490-500/mt FOB Black Sea levels in bookings a week ago.