The negative outlook in the international steel market is taking its toll on Turkey’s import scrap market, with Turkish mills exerting pressure on scrap prices citing their increasing costs and mainly the lack of demand. Following the recent holiday, the expectations of livelier demand for steel have not materialized in Turkey, with the market instead very silent with little trading. One scrap supplier commented that $360s/mt CFR may be achieved in the coming period for HMS I/II 80:20 grade, and several suppliers agreed that there is more room for deep sea scrap prices to fall. This level is closer to the Turkish producers’ desired levels at $350-360/mt CFR. “There is not enough demand for scrap. But after one round of bookings, we may see another recovery in the deep sea segment. I believe $380s/mt CFR is more likely since the EU is starting its holidays gradually and scrap flow is slowing down sharply,” another supplier commented. There is one more factor to consider. SteelOrbis hears that scrap flow in the EU has been hit by the heat wave, which is causing water levels in rivers to fall. “Most vessels also prefer to carry coal instead of scrap. There is a big risk of a gas supply cut by Russia and countries are getting ready by increasing their coal usage,” a source commented. Another source said that water levels are “historically and critically at low levels.” It is also observed that Turkish steelmakers have started to reduce their domestic rebar quotations. Today, July 22, it is heard that there are sales of small tonnages at $670/mt ex-works by a Marmara-based producer, which is now closer to accepting $660s/mt ex-works.
Under the current conditions, the deep sea benchmark HMS I/II 80:20 scrap in CFR terms has recorded a 9.68 percent increase week on week. The month-on-month prices are now higher by 9.19 percent in the deep sea segment, with prices in the range of $360-377/mt CFR.
Last week, scrap market players throughout the US were firm in their stance that August prices would settle at sideways. This week, however, more than half of those polled say they believe that down $10- 20/gt, across the board, is more likely. “There’s a lot less confidence this week, unless Turkey shows back up and does something miraculous,” a source said. Another point to consider is the fact that US domestic HRC prices are still trending downward. As of earlier this week, HRC spot market prices fell to roughly $44-$45 cwt. ($970-$992/mt or $880-$900/nt) FOB mill, which is the lowest since December 2020. “In addition to the scrap overhang, sheet steel prices are still falling,” an East Coast-based source pointed out, adding, “The mills are going to want to preserve every bit of margin that they can.”
The local Italian scrap market has recorded a sudden spike in prices in the range of €50-70/mt over the past two weeks but not for all buyers. “There is some interest in scrap, mainly from rebar producers who received some orders,” an Italian source commented. However, the general situation remains unclear with the fundamental conditions unchanged. “The future sentiment is not so good. This increase will most probably be temporary. We shall wait and see. Ahead of the summer holidays, Italian producers are planning maintenance works and so they will not require scrap in the coming period,”, the source stated.
Over the past month, prices in the local German scrap market have decreased further in line with the international market. Scrap export prices had exerted pressure on the local market, and German mills took the opportunity to lower their procurement quotations as they were also cutting back their production rates. Currently, Germany is gradually entering its holiday season. This will mean lower scrap flow to yards, but also lower demand from German producers. “We are already observing a 40-60 percent fall in scrap flow if we compare it with a normal month,” a sub-collector in German stated. Some rolling mills in Germany have decided to close for the holidays earlier than planned because of the Russian gas issue, as there are still concerns about this problem in the EU. A major producer in the region stated that the demand for steel is also not great, and so both demand and supply are slowing down.
Import scrap activity in Pakistan has remained mostly muted this week, with most buyers holding back in anticipation of cheaper offers. In particular, by the end of the week, offers for shredded 211 scrap of UK and European origin in containers to Pakistan have dropped to $450-465/mt CFR, compared to $475-485/mt CFR at the beginning of the week and are down by $30-40/mt week on week. The depreciation of the national currency has continued to exert pressure on Pakistani steelmakers, making the business environment especially challenging for them. Specifically, the Pakistani rupee broke all previous records this week, falling to a new low of PKR 225 against the US dollar.
In Bangladesh, following a relatively long pause in bookings, steelmakers have resumed bulk scrap bookings. In particular, a deal for an ex-Australia/New Zealand 30,000 mt cargo in bulk has been reported this week, in which 12,000 mt of HMS I/II 80:20 was priced at $425/mt CFR and 18,000 mt of bonus grade at $430/mt CFR. Meanwhile, offer prices for ex-UK shredded scrap in containers in Bangladesh have been voiced at $475-490/mt CFR, compared to $505-520/mt CFR last week. Besides, according to sources, some offers have already come to $460/mt CFR.
The major EAF-based steel producer in Japan, Tokyo Steel, has announced a further cut in its local scrap purchase prices, by another JPY 2,000-3,000/mt, effective as of July 23. After the reduction announced by Tokyo Steel on July 22, prices for H2 scrap have dropped to JPY 43,000-46,000/mt ($311-333/mt) depending on the mill, down by JPY 2,000/mt compared to July 15. The dollar-based prices have decreased by $13-17/mt. Tokyo Steel’s shindachi scrap prices have decreased to the range of JPY 45,000-48,000/mt ($325-347 346- 364/mt), down by JPY 2,000-3,000/mt. Prices have indicated a $17-21/mt decrease on US dollar basis since July 15.
The SteelOrbis reference price for ex-Japan H2 scrap has declined further to JPY 40,500-44,000/mt ($293- 318/mt) FOB, down by JPY 4,500/mt ($144/mt) on the lower end due to the bids of Hyundai Steel and down JPY 2,000/mt ($131/mt) on the upper end amid the offers received by Vietnamese buyers this week.
Steel demand in Vietnam, similar to the situation in other Southeast Asian countries, is very slow and is still exerting pressure on import scrap quotations. Market players state that prices have some more room to decline, while they are monitoring the situation regarding the US Federal Reserve’s interest rates. “This is taking a toll everywhere. It also causes the Japanese to export at lower levels,” a source commented. SteelOrbis has learned that an ex-Hong Kong deal for HMS I/II 50:50 scrap by bulk to Vietnam was closed at $383/mt CFR last week. Following the Kanto tender that indicated a sharp decline in scrap export prices, Japanese H2 grade scrap is offered to Vietnam at $380/mt CFR. Ex-US West Coast containerized HMS I/II 80:20 scrap cargoes are offered at $365-370/mt CFR Vietnam, but buyers’ bids are at $350s/mt CFR.
As Taiwan’s import scrap market has continued its decreasing trend over the past week, market players state that “there is nothing but price fall” in the market. These recent sharp declines have made Taiwanese mills nervous, leading them to expect further price decreases in the coming period. According to a source from a Taiwanese mill, “Producers are scared. This speed of decline is not healthy and they are not sure if this is the bottom.” Another source in Taiwan stated, “We are all experiencing the same problems. Amid the inflation, interest rates are rising and demand for import scrap is on the low side along with steel demand.” As compared to the levels recorded in SteelOrbis’ report published on July 15, the price of ex-US HMS I/II 80:20 scrap in containers to Taiwan has declined from the range of $360-365/mt CFR to $345/mt CFR. Meanwhile, offers for Japanese H1/2 50:50 scrap by bulk to Taiwan have indicated another $20/mt decline from $370-375/mt to $355/mt, both CFR.
While South Korean mills continue to maintain a mostly cautious stance towards imports, Hyundai Steel has decided to bid for Japanese scrap after the break it took from imports. South Korean producers are procuring most of their scrap needs from their domestic market and have little incentive to import scrap as economic and trade-related outlooks are not so great in the region. According to one source, “South Korean steelmakers have decreased their domestic scrap prices by about $80-90/mt within two weeks since early July due to the gloomy product market outlook. And it is likely to continue a little longer with not much hope for a rebound. Most mills are unwilling to take the risk of buying imported scrap due to high inventories, the negative product market, and good domestic scrap flow with a high possibility of decreasing prices.” As compared to the levels announced on June 9, Hyundai Steel has decreased its bid for Japanese H2 grade by JPY 12,500/mt to JPY 40,500/mt ($293/mt) FOB, but the depreciation of the Japanese yen has had a big impact on dollar-based quotations, resulting in a $103/mt decline. No offer from the US West Coast for bulk HMS I scrap was given to South Korea this week.