Despite hopes of a more stable market this week, Turkish mills have continued to achieve lower deep sea scrap prices in each new deal. In the first days of the week, ex-US scrap prices moved closer to $340/mt CFR, increasing the pressure on European scrap sellers. The euro’s depreciation against the US dollar is not helping the price situation, while the tonnages available from the EU are increasing despite unchanged collection costs.
On January 14, SteelOrbis’ reference price for ex-US HMS I/II 80:20 scrap declined by another $4.5/mt from the previous confirmed ex-US deals. Several market sources stated on January 14 that what European scrap suppliers would do after the drop in the ex-US prices would have a determining impact on the market. “The euro-US dollar exchange rate has also given some edge to European sellers. They were sure that collection prices would not drop further, but now due to the exchange rate they may have room to cut their export prices,” a source at a major Turkish mill noted.
On Wednesday, January 15, deep sea prices continued their downward trend, while some Baltic and EU-based sellers started to voice higher offer prices, trying to set some limit to further declines. A source at a major Turkish producer said offers “obviously” had room for negotiation. A seller of ex-US and ex-EU scrap commented that the abovementioned offers from Baltic and EU regions were not workable, stating, “Those offers are high for ex-EU HMS I/II 80:20 scrap. The workable price is likely to remain at $325-330/mt CFR.” Another source commented that, even with the upward revisions announced by some European mills last week, prices were unlikely to indicate an overall rise.
As of January 16, Turkey’s import scrap prices were believed to be very close to the bottom if not already there and seemed to have recovered a little. Two ex-EU scrap bookings disclosed to the market on January 16 showed diverse price trends. Some observers hoped that the latest price levels could force buyers to accept levels above $330/mt CFR, which were already targeted by most sellers. “Actually, Turkish mills are not showing much interest in offers. Only two major mills continue to purchase deep sea scrap cargoes, so they have the power to exert pressure on quotations,” a European scrap seller commented. A source at a major Turkish mill stated, “European scrap sellers believe that they can lower their collection prices after these recent sales. Meanwhile, the price is attractive, and a small increase would not change buyers’ ideas regarding purchases of scrap for February shipments.”
Today, January 17, Turkey’s import scrap market has been relatively silent. After concluding several deep sea transaction over the past two weeks, buyers and sellers are trying to take a breather. Sellers once again are tending to push for an upward price correction, particularly after the stressed cargos sold this week. SteelOrbis agrees that the deep sea scrap market could be close to bottoming up, provided collection prices do not drop in the coming week. There are still a few stressed cargoes in the market, which may cause prices to drop again. The pricing decisions of the sellers of these cargoes may have a psychological impact on the market in the coming days. SteelOrbis has heard that some deals have also been concluded this week, without any details being released, reducing Turkey’s need for February shipments. “Maybe a balance can be found next week in terms of prices. I believe an upward movement will then be possible,” a European scrap seller said today. Another source agreed, adding, “Deep sea scrap prices are very low, at the lowest levels we have seen for years now. A bit of an improvement will not surprise me, but there will not be a significant one.”
Under the current conditions, the deep sea benchmark HMS I/II 80:20 scrap prices in CFR terms have moved down by 2.42 percent week on week. The prices are now 5.46 percent lower month on month in the deep sea segment, with prices being in the range of $327-339/mt CFR.
US domestic scrap prices in the US Northeast region for January settled sideways versus December values amid limited new domestic finished steel demand early in the first quarter, and given the mostly sideways to lower scrap export pricing. Prices in the Ohio Valley for January settled up $20/gt versus December as mills paid higher prices to suppliers as inventories on the ground continued to be reported at low levels and given the weather-related transportation delays in the region.
Over the past week, the local Italian scrap market has indicated diverse trends. In fact, steel producers who have continued to buy scrap over the past month and who have good stock levels have kept their purchase prices unchanged, while those who did not purchase in December have announced an increase of €5-10/mt.
Uncertainty remains as to how scrap prices will trend in the coming weeks. The situation in the finished steel market does not seem to be particularly favourable at the moment because of the shortage of new orders, the difficulty in raising selling prices and soaring energy prices at the beginning of the year. Another decisive factor will be the availability of scrap, which, according to market participants, is already rather low.
Prices in the local scrap market in Spain have remained largely unchanged over the past month, registering only a €5/mt increase for HMS and shredded. According to market participants, demand for scrap from steel mills continues to be stable, though not particularly buoyant.
Local German scrap prices have indicated a slight upward movement at the beginning of the year, but this increase has been due to the lack of scrap availability rather than due to better demand. Prices have increased by a range of €5-20/mt based on the grade, and German mills continue to buy at a regular pace. Because of the slow demand, flows to export yards are increasing, also fostered by the favorable euro-dollar exchange rate.
The situation in Poland is similar to that in other European countries. Domestic scrap prices at the beginning of January have remained mostly unchanged compared to late December and trade is still slow after the Christmas holidays. HMS I collection prices stand in the range of €295-300/mt DAP, and - as in Germany - many suppliers are redirecting their material to export yards because of the slow demand in the local market.
South Korean steel producer POSCO has remained the only buyer of Japanese scrap in South Korea. Market sources report that its fellow South Korean steelmaker Dongkuk Steel has even announced a break from local scrap purchases between February 10 and March 4 for its Pohang plant, with the producer expected to start major maintenance works in the plant. Meanwhile, Hyundai Steel’s announcement of plant closures and its decision to cut production capacity utilization rates further means that it will not resume scrap imports soon. Hyundai Steel plans to suspend operations at its Incheon No. 2 rebar plant on January 13-27 and at its rebar plant in Pohang on January 22-31 due to the sluggishness of the construction industry in South Korea, market sources report.
POSCO has shared bids for Japanese HS grade scrap at JPY 49,000/mt ($312/mt) CFR, stable week on week. POSCO has also shared bids for Japanese shredded scrap at a stable level of JPY 48,000/mt ($308/mt) CFR. Considering the gap between ex-Japan shredded and H2 scrap prices at around JPY 3,000-4,000/mt, this means indications for ex-Japan H2 prices for South Korea are at JPY 41,000-42,000/mt FOB or $263-270/mt FOB.
Taiwanese producers are receiving offers from the US and the Japan as usual but there are diverse price trends for these two origins. While US-based suppliers are trying to increase their offers to Taiwan, with relative success, Japanese sellers are struggling to find buyers in Taiwan at their desired levels, despite the decline in prices.
Current offers for ex-US HMS I/II (80:20) scrap in containers to Taiwan are at $295-297/mt CFR, narrowing from last week’s $290-300/mt CFR. Over the past week, offers shared for Japanese H1/2 (50:50) scrap bulk have dropped by $9/mt on the lower end and by $2/mt on the upper end to $301-313/mt CFR.
Ahead of the Lunar New Year holiday on January 28-February 3, Vietnamese mills’ appetite for import scrap has not recovered much. Amid the lack of steel demand and slower industrial production, Vietnamese buyers’ price ideas are different from those of sellers.
Offers for Japanese H2 scrap to Vietnam have decreased over the past week by $5/mt on the upper end to around $315/mt CFR. Ex-US bulk HMS I/II 80:20 scrap offers to Vietnam have increased by $5/mt on the lower end to $350/mt CFR. Vietnamese mills’ ideas of a workable level for this grade are approximately $10/mt lower than offers.
Meanwhile, Tokyo Bay FAS-based prices for H2 grade scrap are still at JPY 40,000/mt ($257/mt), with the dollar-based price up $1/mt week on week. This level shows that FOB prices are now at JPY 41,000/mt ($263/mt) for this grade.
Tokyo Bay HS grade scrap prices still stand at JPY 45,500/mt ($292/mt) FAS, $2/mt higher week on week. However, shindachi scrap quotations have increased by JPY 1,500/mt to JPY 46,000/mt ($295/mt) FAS, up $9/mt week on week.