While Turkish mills’ appetite for deep sea scrap cargoes has increased this week, negotiations have not resulted in common ground. Due to the ongoing rise in sea freight rates and the reluctance of shipping lines to approach the war zone, all sources report that the biggest problem is the availability and cost of vessels.
“We are failing to find vessels. At the end we decided to wait to see a clearer picture before sharing offers with Turkey,” a European scrap seller said today, March 13. Another supplier from the Baltic region also reported problems with freight but also said they were trying to fulfill their commitments arising from previous contracts, adding “Scrap flow is too slow. We are trying to not ask for deadline extensions.” Last week, SteelOrbis already reported that some suppliers had started to ask for postponements due to sea transport issues. Ex-US HMS I/II 80:20 scrap offers have risen to $385/mt CFR Turkey, still at least $5/mt higher than Turkish mills’ desired price levels. The significant increase in US-Turkey freight rates has been causing suppliers to focus on their local market, though they are also reporting that flow to their export yards is on the low side. Meanwhile, ex-US East Coast suppliers are reportedly cutting their collection prices as they see little opportunity to conclude transactions with Turkey.
On the European side, market sources report that local prices are now softening. Last week, the hike in energy prices had little impact on European mills’ demand for scrap but this week, with the war continuing, uncertainties and costs are increasing for European mills, and so they are becoming more cautious. Earlier this week, a German sub-collector was receiving bids from export yards at around €265/mt DAP, while by mid-week they reported some exporters had cut their collection bids to €260/mt DAP. This shows that all players in the market are trying to lower their cost risks. Despite the warmer weather in the EU, scrap collection activities have slowed down as oil prices are rising, sources report. Also, most scrap traders, independent of their position in the market, are keeping inventories on hand due to the expectations of an uptrend in prices. Earlier this week, an ex-EU scrap cargo was offered at $373/mt CFR, which was not accepted by mills, while the latest offer from the same region was at $378/mt on March 12 and on March 13 this offer was taken out of the market as sellers believed it is impossible to earn money at such levels. According to one source, an ex-Baltic offer has been shared in Turkey today, with the HMS I/II 80:20 scrap price standing at $380/mt CFR.
In Turkey, mills are still trying to increase their local rebar prices, but traders are adamant that these prices are mostly unworkable. The traders that have stocks on hand are waiting for higher levels and their plan is to bring in cash when they feel rebar prices have peaked. “With the ongoing war and the expectations of inflation, I do not believe that construction sites will ask for much rebar in the short term. Therefore, I am not looking to restock,” a trader in Marmara said this week, while an Izmir-based rebar trader said he will dump his inventories when the opportunity arrives. Turkish mills’ need for scrap has not changed. There is still a very long way to go to complete their purchases for April shipments unless they start announcing stoppages. SteelOrbis hears that at least five mills are trying to find cargoes, with some focusing on short sea to fill the gaps in their scrap management plans. None of them has yet accepted the rise sought by sellers. “I wonder how long we can wait though, especially the big ones. Maybe silent deals may be done in order not to push the market quickly,” a source at a Turkish mill said today. “I believe transactions will start next week and prices will increase eventually,” a source at a major mill commented.
Under the current conditions, the deep sea benchmark HMS I/II 80:20 scrap prices in CFR terms have moved sideways week on week. The prices are now 0.54 percent lower month on month in the deep sea segment, with prices being in the range of $365-374/mt CFR.
US ferrous scrap prices during recent March buy-cycle negotiations in the US Ohio Valley and US Northeast regions settled flat to February levels, as improved inflows into local scrap yards appear to have boosted the depleted inventories reported to SteelOrbis during February.
The price of April US ferrous scrap is heard sideways to down next month as a result of increased supply tied to better weather-related scrap inflows into local collection yards, market insiders told SteelOrbis. Insiders added that sharp increases in freight rates for export vessels headed to overseas scrap markets could lead to increased US supply as export scrap backs up at US ports.
“We’re hearing that April scrap is very much flat to down” said one US Midwest mill-based scrap buyer.
“Domestically, April pricing is looking sideways,” said another Midwest scrap insider. “On the export side though, scrap destined for Asian markets is up about $30/gt because of increased shipping rates.”
“We expect a bit lower prices, down $10-20/gt for obsolete grades [HMS, P&S],” noted still another Midwest scrap insider. “I would not be surprised to see primes settle sideways for April.”
The Italian scrap market has recorded little movement and relatively low demand this week, linked to uncertainties relating to the war in the Middle East, the lack of activity in international markets and a slowdown in production. Most of the contracts in the past week have been concluded at unchanged or slightly lower levels than previous prices - down between €3/mt and €5/mt - both in the local and import markets, especially from Germany. Another aspect which is worth mentioning is related to the production slowdown by several Italian mills, which have adopted various strategies to keep electricity costs under control.
At the high point of March purchase negotiations, the German scrap market has remained largely stable in a context of strong uncertainty. Scrap purchase prices have been generally stable or slightly down - by €2.5-5/mt - compared to the previous month. Only in one case has a large producer granted scrap price increases of about €15-20/mt on all scrap grades, to realign with current market levels. On the export side, there are still "clear difficulties", with HMS I/II 80:20 collection prices at around €260-265/mt DAP ARAG (Amsterdam, Rotterdam, Antwerp, Ghent) ports, down by €5/mt on the lower end of the range.
Having followed an upward trend since July last year, Japan’s Kanto scrap export tender closed with yet another price increase in March. The total tonnage of the cargo in the tender was 20,000 mt, for shipment either to Vietnam or Bangladesh. Over the past month, the Japanese yen moved from 153.6 against the US dollar to JPY 158.36 as of March 11, causing the change in the dollar-based tender price in the tender to be steeper than usual.
In the Kanto export tender, the highest bid was at JPY 50,121/mt ($316/mt) FAS, JPY 2,038/mt higher than last month. The dollar-based price moved up by $3/mt from last month’s $313/mt FAS, taking into account the change in the Japanese yen-US dollar exchange rate.
The leading Japanese EAF-based steel producer Tokyo Steel has increased its local scrap procurement prices by JPY 2,000-2,500/mt today, March 11, following the rise recorded in the Kanto scrap export tender. The scrap shortage experienced in Japan for a while now has been impacting not only exports but also local mills, sources report.
The general price range for H2 grade scrap has moved up by JPY 2,000-2,5000/mt as compared to the levels recorded on March 6 to JPY 48,000-48,500/mt ($303-306/mt) depending on the mill.
As the war in the Middle East continues, impacting oil prices and sea freight rates, availability of import scrap for Taiwan is on the low side. Not only is freight from the US increasing but also the sharp price rise in Japan in the Kanto tender, which has been reflected in the local Japanese market, has reduced import scrap availability for Taiwan. Sources report that import billet is also not an option for Taiwanese buyers. Under the current conditions, import scrap prices are rising in Taiwan, while steel demand is not following at the same pace.
Offer prices for ex-US HMS I/II (80:20) scrap in containers to Taiwan have increased over the past week from the range of $328/mt CFR to $333-335/mt CFR, with very few offers heard. “A lot of offers are still held back due to the lack of freight resulting from the war in the Middle East” a source at a major Taiwanese mill commented. Actual prices in ex-US deals have moved up from $325/mt CFR to $329-330/mt CFR. This week, Japanese H1/2 (50:50) offers to Taiwan have disappeared once again.
As sea vessel traffic has been disrupted significantly due to rising oil prices, import scrap offers to Vietnam have followed suit and increased sharply this week. Some of this rise is the result of higher freight rates, while the rest is due to lower scrap availability both from the US and Japan.
Ex-US bulk HMS I/II 80:20 scrap offers to Vietnam have moved up sharply by $10/mt week on week to $375-380/mt CFR. Some sources reported that this is the “Trump effect”. No deals are heard to have been done at the new levels, sources add. Vietnamese buyers have increased their bids for ex-US West Coast cargoes by $5/mt over the past week to $355-360/mt CFR, SteelOrbis hears. Meanwhile, a deal in Vietnam is reportedly closed at $350/mt CFR for Japanese H2 grade scrap.
Pakistan’s import scrap market has moved up further this week, with fresh bookings for ex-EU shredded scrap concluded at higher levels compared to last week. However, overall market activity has started to slow, as local players are shifting into Eid holiday mode (March 19-20). Offers for ex-EU/UK shredded scrap have been heard at $405-410/mt CFR this week, up from $385-395/mt CFR heard last week, while tradable levels are now estimated at $400-405/mt CFR. On the ex-UAE side, no firm offers have been heard in the market this week. In the local Pakistani market, activity has slowed significantly, with buying and selling reported to be very limited in the last week before the Eid holiday. Local scrap equivalent to shredded is reported at around PKR 146,000/mt ex-warehouse, up by around PKR 5,000/mt week on week, while offers for grade 60 rebar have been heard at PKR 245,000/mt ex-works, higher by around PKR 17,000/mt from last week.
In Bangladesh, import scrap prices for both containerized and bulk scrap have increased sharply over the past two weeks, with offers and deal prices moving up amid rising freight costs and firmer sentiment in the key supplying markets. Buying activity has remained selective, as mills have continued to resist the higher levels despite the overall upward direction in the market. Offers for ex-EU/UK shredded scrap in containers have been voiced at $390-395/mt CFR, up by $17-20/mt over the past two weeks, while offers for ex-EU HMS I/II 80:20 scrap have settled at $370-375/mt CFR, up by $15-20/mt over the same period. At the same time, a few deals for small volumes for ex-Australia shredded scrap have been heard at $385/mt CFR, up by around $5/mt over the past two weeks, while HMS I/II 80:20 scrap has been reported at $365/mt CFR, up by $5/mt over the same period. In the bulk segment, Bangladesh is reported to have booked around 20,000 mt of ex-Japan H2 scrap through the Kanto export tender, with the deal price estimated at around $390-395/mt CFR Bangladesh. Furthermore, offers for ex-Japan H2 scrap have been heard at $390/mt CFR, up by $35-40/mt compared to two weeks ago, while ex-US HMS I/II 80:20 scrap has also been heard at $390/mt CFR, up by around $35/mt over the same period. Market sources have indicated that the sharp increase in bulk prices has been driven largely by freight costs, with freight from Japan to Bangladesh rising from around $45/mt to over $70/mt.