Turkey’s import scrap market has continued its downward trend unabated, with import scrap prices declining further in each deal. “We all thought that we had hit the bottom at certain levels since prices started to fall from $600s/mt CFR, but the bottom is not here yet it seems,” a source commented. Although scrap flow to export yards has slowed down significantly, with some even describing the situation as alarming, Turkish mills have not returned to the market in full force. As a result, import scrap quotations in Turkey are still moving down. One seller stated, “Now Turkey’s import scrap market may be close to hitting the bottom since collection has slowed down significantly amid the recent cuts in collection prices.” However, a Turkish long steel mill producer said, “Turkey is not looking for a price bottom or trying to exert pressure on scrap quotations. On the contrary, falling scrap prices are not helping anybody, sellers or buyers. The problem is not the scrap price, it is still the lack of finished steel sales. Therefore, if demand does not recover, the scrap market cannot either.” It also attracts attention that Turkish mills’ finances are stressed due to various reasons, such as unrealized steel sales, reduced credit lines, and high levels of finished steel inventories in hand. At the end of the week, another ex-EU scrap deal pushed prices down once again, and the question of whether this is the bottom is now heard more often. Almost nothing has changed in Turkey’s finished steel market, demand is still insufficient to support a stabilization for product or scrap prices. Since the main problem is not improving in Turkey, import scrap prices are expected to remain soft. Under the current conditions, the deep sea benchmark HMS I/II 80:20 scrap in CFR terms has recorded a 9.09 percent decrease week on week. The month-on-month decline is now 28.18 percent in the deep sea segment, with prices being in the range of $315-335/mt CFR.
It is also known that two ex-US bulk cargoes were sold to India, an unusual destination for bulk cargoes from the US. Also, a SteelOrbis contacts stated that, over the past week, India has bought four to five cargoes from various sources - traditionally suppliers to Turkey such as the US, the EU and the UK - each for 40,000 mt. This adds up with the previous ex-EU transactions to China, Bangladesh and Vietnam.
In our last report a week ago, scrap market sources throughout the US believed that July scrap prices were poised for a downturn. And while initial predictions put the market at down $10-$0/gt for cuts and shred, and down $40-50/gt for primes, “a lot has changed in the past seven days.” For example, in conversations held over the past 72 hours, some sources have said they believe that cuts and shred could trend down by $20-40/gt, whereas others think that down $50-60/gt may be more likely. Similar, wide-spanning predictions have been heard for busheling scrap, with some thinking that primes will soften by $50/gt, and others stating they think that busheling could go down by $75-100/gt if not more. The rationale for a possible sharp downturn for cuts and shred in July is linked to several factors, such as still-softening scrap cargo prices into Turkey and an anticipated less-than-ideal July scrap buy from domestic flat rolled producers. Additionally, still-falling sheet steel prices have many finished steel buyers “camped out on the sidelines,” as many are holding off on placing orders until they are sure the market has bottomed out.
The local German scrap market has continued to fall in the month of June. The recorded decline in prices was lower than the expectations stated in early June, but market players believe that there is more room for a further fall due to the approaching summer. “Since the summer holidays have started in some regions of the EU and will start in others, mills will cut their production utilization rates and their need for scrap will decline. Also, scrap export prices are exerting strong downward pressure on local quotations,” a German source reported. One of the traditional scrap suppliers to Turkey has given bids for HMS I/II 80:20 scrap to a German sub-collector at €250/mt DDP Antwerp. At the same time, all SteelOrbis contacts agree that scrap flow in Germany has nearly come to a halt following the recent price cuts.
As anticipated by SteelOrbis, the local Polish scrap market has moved down further in June. “The market is more or less similar to Turkey. There is no demand for finished steel in Poland. Some mills are taking a break from production. Their official announcements mention maintenance, but the real reason is more their lack of sales,” a Polish source commented. As a result, the quantity of scrap bought by Polish mills has declined over the month of June, causing prices to move down sharply once again. During the past month, prices in the local Polish market for HMS I scrap have moved down significantly by €130/mt to the range of €330-340/mt DAP, from levels of €460-470/mt DAP. Higher grades like bundle scrap are currently at around €340-350/mt DAP, depending on the mill, according to sources.
The major EAF-based steel producer in Japan, Tokyo Steel, has announced three consecutive price drops this week totaling JPY 2,000-4,000/mt. Tokyo Steel’s prices for H2 scrap declined to JPY 54,000-55,000/mt ($399-407/mt) delivered on June 21, and then closed the week at JPY 53,000-54,000/mt ($393-401/mt). In the middle of the week, the mill announced a cut only for its Utsunomiya plant. The Shindachi scrap price range of Tokyo Steel has also decreased to JPY 55,000-57,000/mt ($408-423/mt). Japanese sellers’ opportunities in the export market are shrinking as South Korean mills are staying away from imports once again, while Vietnamese buyers consider Japanese prices to be on the high side and are not showing much interest in scrap purchases anyway. As a result, the Japanese scrap market is under downward pressure, similar to the international market.
As trading and demand in the Vietnamese steel market remains sluggish, import scrap prices to the country continue to decline. “It is similar to the international trend. Demand is slow, prices are decreasing, and hence there are not many deals done by Vietnamese buyers,” a source reported. Particularly, Vietnam’s steel market is impacted by the negative changes in China. “Although we saw a bit of a recovery today [in the futures market on June 23], I am not sure it will be enough to have a good impact on the physical market,” the source added. Prices for imported scrap have fallen mainly by $20-30/mt depending on the origin in Vietnam this week and some sellers have managed to conclude deals. The outlook has remained gloomy as customers have cut bids even more. SteelOrbis has learned that an ex-EU deal has been done to Vietnam with HMS I/II 80:20 scrap standing at $400/mt CFR. Japanese suppliers’ H2 scrap offers to Vietnam are standing at $425-435/mt CFR.
The Taiwanese scrap market is still characterized by silence in terms of trade. Ex-US scrap offers to Taiwan have declined sharply over the past week, while Japanese suppliers have only announced a $5/mt softening in their offers to Taiwan. However, once again Japanese suppliers’ offers are considered too expensive as compared to the competition. “We have not received many offers from any of the supplier regions. Today, in particular, is very quiet,” a Taiwanese source commented. The lowest offer price for ex-US HMS I/II 80:20 scrap in containers to Taiwan has been at $380/mt CFR this week, significantly lower than the $425/mt CFR recorded in a deal last week. Meanwhile, offers for Japanese H1/2 50:50 scrap by bulk to Taiwan have been at $435/mt CFR, down only $5/mt compared to the $440/mt CFR level recorded in a deal last week.
South Korean mills are showing little interest in scrap imports, as their local scrap market is declining gradually and is expected to continue to do so. “It seems our domestic scrap market will continue to fall at a faster pace, and, if it were not for the effort to support product prices, the fall could have been faster. So, if product prices are no longer supportable, we will be lowering the domestic scrap price much faster and may have little need for import scrap,” a source at a major South Korean mill commented. SteelOrbis has learned that Tokyo Bay FOB based price for H2 grade is at JPY 52,000/mt, which translates to $435/mt CFR South Korea with $50/mt freight. Ex-US bulk HMS I scrap offers to South Korea from the West Coast are at around $390-400/mt CFR, while some sources report offers even at $380/mt CFR on Friday, far below the assessment of $450/mt CFR last week.
As a result, the SteelOrbis reference price for ex-Japan H2 scrap has settled at JPY 52,000/mt ($385/mt) FOB, down by JPY 1,000/mt on average or $13/mt, taking into currency exchange rate fluctuations, over the past week.
Prices for import scrap in Bangladesh have posted sharp drops, especially in the containerized segment, over the past week, though trade activity was close to zero affected by slow demand due to heavy rainfalls in many parts of the country, coupled with production cuts due to higher electricity tariffs and the depreciating national currency. In particular, offer prices for ex-UK shredded scrap in containers in Bangladesh have been voiced at $460-465/mt CFR, down by $65/mt over the past week. Besides, offers for UK/EU HMS grade scrap have settled at $420-425/mt CFR, compared to $480-500/mt CFR last week. At the same time, indicative offers for ex-US and ex-Europe HMS grade scrap have been reported at $395-400/mt CFR, compared to $400-410/mt CFR last week, while several bids have been heard at $380/mt CFR and below.