Following the two-week ceasefire announced in the Iran war, the deep sea scrap market has taken a breather with market players trying to evaluate the situation and its impact on shipping as well as energy prices. After the ceasefire, oil prices declined sharply and then increased again, with Brent oil prices now standing at 95.45 dollars per barrel. The sentiment in Turkey’s import scrap market has changed in the direction of stability after the ceasefire announcement and both buyers and sellers have taken a step back. Market sources report that sellers need to evaluate their costs to see what the new offer prices should be, while buyers started to say that deep sea HMS I/II 80:20 scrap prices should move down to $400/mt CFR amid the lack of steel sales to support such levels.
However, in a deal that surfaced today, April 10, the anticipated decline has not materialized. An Izmir-based steel producer concluded an ex-UK booking on Wednesday, April 8, with the HMS I/II 80:20 scrap price standing at $395.5/mt CFR, $1.5/mt higher than the previous ex-UK deal done by the same parties. As a result, SteelOrbis’ reference price for ex-UK/EU scrap has increased by 0.38 percent from the previous day to $395.5-396.5/mt CFR.
Considering that buyers have different positions in terms of scrap inventories, another deal with a price increase would be needed to cement the slow uptrend. Most market sources said that they would need to see an ex-US deal before deciding what to do. Turkey’s rebar sales have slowed down significantly this week as traders decided it is time to realize profits. The local Turkish rebar market has been struggling for several reasons this year. First of all, Turkey’s economy is still recovering, but the Turkish lira continues to lose strength gradually. Secondly, the war has forced the Turkish government to increase energy prices, which has caused higher production costs for Turkish mills. However, the construction season is late this year and the weather is still recovering. With deep sea scrap quotations moving up by 7.44 percent over the past month, the same cannot be said for rebar prices. Turkish mills have even dropped their local prices by $5-13/mt since April 6. While the margins of mills are very tight to zero, demand is not sufficient to support higher price levels.
On the scrap sellers’ side, US East Coast export yards have increased their collection prices by $10/mt, giving the impression that they need to secure tonnages. In the EU, collection prices in the export yards have also increased by €5-11/mt week on week. The euro-dollar exchange rate is also fluctuating, on April 10 being at €1.171 to the dollar, moving from 1.15 early this week. “Even if sea freight softens, which we do not see yet, the room caused by this drop can be compensated by the exchange rate,” a European source commented. Turkish mills will need another 19-20 deep sea cargoes for May shipment, which also signals that they will not wait too long before they start buying scrap again. “We evaluate every scenario, but in the end it may mean little since the developments in the Middle East are very rapid, sometimes even changing hourly,” a source at a Turkish mill asaid.
Under the current conditions, the deep sea benchmark HMS I/II 80:20 scrap prices in CFR terms have increased by 0.76 percent week on week. The prices are now 7.44 percent higher month on month in the deep sea segment, with prices being in the range of $365.5-400/mt CFR.
As was previously projected by SteelOrbis, most mills in the US Midwest, including all the most significant buyers, have announced a price reduction of $20/gt ($20.3/mt) for secondary grades from March settled prices, and a sideways trend for prime grades. Negotiations are ongoing.
Sellers are still resistant, and some were adamant that they would not sell below March-settled levels, but on Wednesday, April 8, some reported that they were starting to accept the broader trend. On the other hand, there has not been definitive confirmation of some mills' intentions in Texas and other Southern states to impose a $30/gt ($30.4/mt) price contraction on obsolete grades. Officially, only some buyers have been seen buying shredded scrap material in Alabama at $10/gt ($10.1/mt) from March prices, and that has been, to date, the only exception to the general trend.
Prices to the US East Coast (USEC) improved by $10/gt ($10.1/mt) this week as sellers are asking for better prices in light of higher export prices to Turkey. At the New York and Philadelphia docks, the price of HMS I moved up by $10/gt ($10.1/mt) to $280-290/gt ($284.5-294.6/mt) delivered to export yard. Some contacts in Philadelphia reported still seeing lower sales levels, specifically at $260-265/gt ($264.1-269.2/mt) delivered, unchanged from last week. Shredder feed rose by $10/gt ($10.1/mt) to $260-265/gt ($264.1-269.2/mt) delivered.
Prices for containerized scrap to the US West Coast (USWC) docks inched up slightly this week, particularly for higher-end deals. A consistent demand for ferrous scrap from Asian countries has enabled this continued growth. The price of containerized HMS I/II 80:20 grew by $5/mt on the higher end and settled at $325-335/mt FAS Long Beach port, while there were confirmed sales to support this. Containerized #1 busheling prices sit at $355-365/mt FAS Los Angeles (LA) port, while shredded is at $345-355/mt FAS LA port.
Containerized ferrous scrap on the US East Coast has remained unchanged despite improving bulk prices. The price of containerized HMS I/II 80:20 is still reported at $325/mt FAS New York port, P&S 5ft at $345/mt FAS port, shredded at $345-350/mt FAS port, and #1 busheling at $355/mt FAS port.
Mexican ferrous domestic prices fell for the second week as mills try to offset higher freight and energy costs. Moreover, a presumed downturn in the US domestic ferrous scrap market for April has allowed Mexican mills to lower their levels. During this two-week period, some mills have recorded price contractions of MXN900/mt across all grades, while others have implemented decreases of MXN300-400/mt.
The decreases have been observed in the Northern, Central, and Bajio regions of the country. Busheling I in those three regions of the country settled at MXN7,800-8,000 ($436.4-$447.6/mt) delivered, a decrease of MXN300/mt ($10-22/mt) week on week. In the state of Veracruz, mills have been reported as buying the grade in the MXN8,300-8,400/mt ($464-470/mt) delivered range.
The Italian scrap market has recorded negligible movements this week, with stable to slightly higher scrap purchase prices observed. Official scrap purchase agreements continue to be concluded at unchanged prices or slightly increased prices by around €5/mt depending on the mill and scrap category.
For their part, however, producers remain cautious overall, in the face of a very delicate and uncertain geopolitical situation.
The reference prices for scrap in Italy remain largely unchanged, as shown in the table below. In particular, E1 scrap prices have been reported at €285-300/mt delivered to mill on average, whereas E3 scrap prices have been reported at €300-315/mt delivered to mill on average.
At the beginning of April negotiations in the local German scrap market, mills are starting to get ready for possible higher levels being asked by local scrap suppliers. According to market reports, two of the main mills in Germany have closed their initial contracts at unchanged or slightly higher prices, but most German producers are still negotiating volumes for this month.
A third mill is reported to be buying E1 at €295/mt delivered and it has raised its scrap purchase prices by €5-10/mt or slightly more in its April purchase prices. However, it is still too early in the month to define a more precise market trend.
As for exports, sources have reported HMS I/II 80:20 scrap prices at German ports at €295-300/mt DAP, up €8/mt on both ends of the range compared to last week.
The Polish scrap market has reported higher purchase prices both from local mills and exporters at the beginning of April negotiations. At a local level, one of the biggest mills in Poland has increased its scrap purchase prices for both W2 (HMS I equivalent) and W7 grades (bonus equivalent), settling them at PLN 1,230/mt (less than €290/mt) and PLN 1,260/mt (around €296/mt), respectively.
Export yards are also increasing their collection prices in the local market, and, as reported by an important player in the segment, HMS I collection prices this week have settled at €285/mt DAP, up €10/mt compared to March 27.
Having followed an upward trend since July last year, Japan’s latest Kanto scrap export tender has closed with another price increase in April, reaching a 1.5-year high. The rise in the Kanto tender is in line with the uptrend observed in the Asian scrap market during the month of March, as well as the increases announced by Japanese steel producers.
In the Kanto export tender, the highest bid was at JPY 54,239/mt ($341/mt) FAS, JPY 4,118/mt higher than last month. The dollar-based price has moved up by $25/mt from last month’s $316/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 today, April 10, following the increase in the Kanto scrap export tender. Market sources report that the uptrend of prices is the result of Japanese mills’ appetite to secure scrap flow to their yards and, with the Kanto tender price reaching a 1.5-year high, Japanese mills are continuing to increase their scrap purchase prices. This is the second hike announced by Tokyo Steel this week following the April 7 hike, with the total price increase reaching JPY 2,500/mt or $17/mt.
Tokyo Steel’s general price range for H2 grade scrap has moved up by JPY 1,000/mt as compared to the levels recorded on March 31 to JPY 51,000/mt ($319/mt), depending on the mill. Including the changes in the exchange rates, the dollar-based quotations have increased by $6/mt.
Taiwanese producers have accepted further hikes for import and domestic scrap prices this week. Despite the ceasefire agreement between the US-Israel and Iran, the impacts of increased energy prices and continuing uncertainties are still reflected in the international scrap market. The sharp price increase in Japan’s scrap export tender has raised concerns in the regional scrap market.
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 $347-353/mt CFR to $356-360/mt CFR. Japanese H1/2 (50:50) offers to Taiwan were at $376/mt CFR before the rises announced by Tokyo Steel and the increase in the Kanto tender.
Import scrap offers to Vietnam have continued their upward trend this week as suppliers are citing increased freight costs and difficulties in collecting scrap. The lack of sufficient scrap in Japan as well as the ongoing effects of the war in the Middle East despite the ceasefire are impacting scrap prices, sources report.
Ex-US bulk HMS I/II 80:20 scrap offers to Vietnam have increased from the range of $395-400/mt CFR to $400/mt CFR. Japanese H2 scrap offers to Vietnam have moved up slightly from $385/mt CFR to $385-390/mt CFR.
Pakistan’s import scrap market has moved up further over the past week, supported by tight supply and sharply higher freight costs, though buyers have shown some resistance at higher levels following the ceasefire announcement in the Iran war. Offers for ex-UK/EU shredded scrap have been reported at $425-435/mt CFR Qasim, up from $420-430/mt CFR last week, with workable levels heard at $425-430/mt CFR. After several deals at $415/mt CFR Qasim earlier this week, more deals have been heard at $420/mt and $425/mt CFR, while the latest transactions for 1,000 mt cargoes have reached $430/mt CFR Qasim. In addition, around 2,000 mt have been sold at $425/mt CFR and another 2,000 mt at $430/mt CFR. Offers from the UAE have remained largely absent due to ongoing geopolitical disruptions, while buying interest has shifted toward the UK, Europe and South Africa, with 500 mt of ex-UK PNS scrap sold at $427/mt CFR, 500 mt of ex-South Africa NTP bundles at $385/mt CFR and another 500 mt of ex-South Africa sheared HMS scrap at $420/mt CFR.
Bangladesh’s import scrap prices have remained largely stable over the past week, with limited fluctuations seen in both the containerized and bulk segments, while overall sentiment has remained weak. Trading activity has been slow, with mills remaining cautious and mostly on the sidelines, though smaller buyers have still been active in the market. Offers for ex-EU/UK HMS I/II 80:20 scrap in containers have been heard at around $380/mt CFR Chattogram, in line with the levels recorded last week, while offers for ex-UK/EU shredded scrap in containers have been heard at around $405-420/mt CFR, remaining close to last week’s levels. In the meantime, ex-Brazil LMS bundles have been traded at $340/mt CFR and HMS I/II 80:20 scrap has been sold at $380/mt CFR Chattogram, while ex-Hong Kong PNS scrap has been booked at $410/mt CFR Chattogram. In the bulk trade, a 10,000 mt cargo from Singapore is heard to have been booked with HMS I/II 80:20 at $400/mt CFR and PNS at $420/mt CFR Chattogram. Market sources have indicated that offers have generally remained firm due to limited availability, while buyers’ bids are still significantly lower, resulting in a widening offer-bid gap and very limited deal activity.