After the recent long holiday, it has been confirmed that prices in Turkey’s import scrap market have declined below $410/mt CFR in European, Baltic and ex-US deals, mostly done during the Feast of Sacrifice holiday period. Given Turkish mills’ resistance to higher levels, a softening in the international scrap market was expected and the decline in prices did not come as a surprise to market players.
After the first confirmed deals earlier this week, the gap between European and ex-US scrap prices was higher than usual with a $12/mt difference. As of yesterday, June 4, another ex-US scrap booking surfaced and showed that ex-US scrap prices continued their downtrend. An Iskenderun-based producer has concluded the deal with HMS I/II 80:20 scrap at $406/mt CFR, and shredded and bonus grades at $426/mt CFR, $2/mt lower than the previous ex-US deal. Some market sources report that a $10/mt gap can be preserved between European and ex-US cargoes, but for months this price gap stood at $5/mt.
The number of offers shared with Turkey is on the high side with Turkish mills resisting the higher end of offers, exerting significant pressure on prices. Some producers have tested the market with levels lower than $395/mt CFR for European cargoes but have failed to convince the sellers. On the sellers’ side, no panic has been observed yet. Most expect trading to start in the coming week as Turkey has been more or less out the market for two weeks now. Some sources from the sellers’ segment mention that the range of $397-405/mt CFR was working just fine before the price hike observed in May. Meanwhile, Turkish mills point to the issues of weak rebar demand, unsustainable rebar prices, and slack construction activities. Several buyers, suppliers and traders commented to SteelOrbis that the postponed recovery of the construction industry - if it continues - can become a big problem for the whole sector. Turkish mills are expected to make price inquiries starting next week.
Under the current conditions, the deep sea benchmark HMS I/II 80:20 scrap prices in CFR terms have decreased by 1.83 percent week on week. The prices are now 1.47 percent lower month on month in the deep sea segment, with prices being in the range of $397-406/mt CFR.
All scrap grades in the local US scrap market have been trending sideways in a limited number of early deals seen so far in the Midwestern, Southeastern, and Western regions. Some of the traders involved conceded that the trading was preliminary as some mills look eager to secure tonnages, yet the sellers involved acknowledged that a conclusive trend for the June trading cycle is not yet determined.
Other buyers reported that they would make announcements soon, as sellers comment that they believe there will be efforts to bring some grades down before the trade cycle is over. Generous volumes of secondary grades have kept participants talking about potential price contractions for those grades, in particular for cut grades along the US East Coast where the export market has softened in recent weeks.
Containerized prices to docks on the US West Coast (USWC) continue to slide down amid subdued East Asian demand for scrap and limited sales to that region. This week, prices decreased by another $5/mt as containerized HMS I/II 80:20 dropped to $340/mt FAS Long Beach port, while contacts state that a decline to $335/mt FAS is expected very soon. At the same time, scrap traders on the US West Coast continue to complain that the rising cost of containerized ocean freight makes it very expensive to conduct business.
Prices to the US East Coast (USEC) docks remained unchanged for cut grades in New York and Philadelphia, while the higher end for shredder feed was reduced and the grade settled at $240/gt delivered to export yard from $240-250/gt delivered last week. Prices in Boston trended sideways for another week as contacts in the New England region maintain that they expect prices to decrease any time soon.
Mexico’s domestic ferrous scrap market trended sideways this week in the Northern, Central, and Bajio regions, despite reported increases in the state of Veracruz. Contacts mention that the particular market dynamics of each region have kept their trends independent from the changes in Veracruz. Last week, it was reported that one of the mills in that state wished to return to the market and increased their prices across the board by MXN 400-450/mt ($23-26/mt) in order to catch up with their competitors who had increased their prices during the time they were absent.
Participants in Mexico attribute stability in the Northern, Central, and Bajio regions to stable demand from mills, which has fostered price competitiveness among mills. Steel production is reported as stable, and minerals production, like iron pellets, grew annually by 9.3 percent in March to 384,029 mt from 351,397 mt the previous year, according to the National Statistics and Geography Institute (INEGI).
The European scrap markets have remained largely silent this week, due to ongoing holidays and long weekends in many European countries.
The first rumors at the beginning of the month, however, point to a largely stable trend in European scrap markets, at least in the first half of June.
According to reports, mills’ demand for scrap in Italy has remained almost silent. On the traders’ side, however, there have been reports of a "hurry" to accept unchanged prices compared to previous deals.
In Germany, mills’ willingness seems aligned to a stable trend for June, although logistical disruptions are still very relevant. The announcement by Austria's leading steel producer of a scrap purchase price increase by €10/mt had caused some concerns among market players earlier this week; however, this rise can be seen as a simple alignment with current market levels.
According to one source, the domestic scrap market in Spain is instead experiencing price increases of €5-10/mt, while the import market is decreasing by about €5/mt.
Finally, the scrap market in Poland has remained mostly silent, and no significant movement has been recorded.
Taiwan’s import scrap market has been following the downward price trend in the international scrap market, while demand for scrap in the country has been on the low side. Market sources report that mills are in no rush to import scrap due to the underperforming rebar segment. While scrap offer prices from the US and Japan have declined, the drop seen in Japanese prices was stronger due to expectations of a downward movement in the upcoming Kanto scrap export tender.
Offer prices for ex-US HMS I/II (80:20) scrap in containers to Taiwan are in the range of $358-361/mt CFR, down from the $363-365/mt CFR levels recorded two weeks ago. Actual prices in ex-US deals have moved down by $ 7/mt in the past fortnight to $355/mt CFR. Despite the lack of Japanese bulk H1/2 (50:50) scrap offers to Taiwan, sources report that there are offers for higher grades. Japanese bulk offers were considered to be on the high side over the past two weeks as compared to containerised alternatives.
Vietnamese buyers’ recent scrap purchases from the US West Coast have reduced their appetite for import scrap from this source, while decreasing prices in the Japanese scrap export segment have also meant less interest in ex-US scrap. Sources report that construction demand in Vietnam has not recovered as initially expected amid the volatile Chinese market, limiting scrap demand in Vietnam.
After buying several ex-US West Coast bulk HMS I/II 80:20 scrap cargoes, offers from the US West Coast to Vietnam are now in the range of $400-405/mt CFR. There have been no deals done from the US West Coast to Vietnam this week. According to sources, Vietnam has bought ex-Japan H2 grade scrap at $370/mt CFR, moving down by $10/mt week on week.
Meanwhile, SteelOrbis has been informed that South Korean steel mill POSCO also bought a cargo from Japan, with the HS scrap price at $388/mt CFR, down $13/mt from their previous deal done from Japan last week.
Pakistan’s import scrap market has remained subdued over the past two weeks, with trading activity failing to recover after the Eid-ul-Adha holiday and with buyers still maintaining a cautious stance ahead of the announcement of Pakistan’s federal budget. More specifically, ex-UK/EU shredded scrap offers have been heard at around $420-425/mt CFR Qasim this week, remaining broadly in line with the levels reported two weeks ago, while bids for ex-EU/UK shredded scrap have been heard at around $415/mt CFR Qasim. According to sources, a 1,000 mt cargo of ex-UK shredded scrap is reported to have been booked at $420/mt CFR Qasim, though no other significant fresh buying has been reported this week. As for ex-UAE material, market visibility has improved slightly, with ex-UAE HMS scrap offers heard at around $425/mt CFR Qasim, though no concluded deals have been reported so far. Market sources indicate that buying interest is likely to remain limited in the near term, as mills are expected to wait for a clearer direction from the upcoming budget before resuming more active procurement.
In Bangladesh, the import scrap market has remained slow this week, but buying activity has started to revive after the Eid holiday and will improve further next week. Some fresh deals have been heard this week at slightly lower levels, but most mills have remained cautious and the trend has not settled so far. More specifically, ex-EU containerized HMS I/II 80:20 scrap has been offered at $384-390/mt CFR Chattogram this week, down from around $395/mt CFR heard two weeks ago, while ex-EU containerized shredded scrap has been offered at $413/mt CFR Chattogram, slightly below the $415/mt CFR level recorded two weeks earlier. In terms of concluded deals, 1,000 mt of Denmark origin HMS I/II 80:20 scrap have been booked at $390/mt CFR Chattogram. As for ex-Australia material, 2,000 mt of shredded scrap have been sold at around $410/mt CFR Chattogram this week, compared to offers at $420-425/mt CFR heard two weeks ago. In terms of other origins, 1,000-1,200 mt of ex-Thailand NTP scrap have been sold at around $412/mt CFR Chattogram, while 2,000 mt of ex-Thailand tin-free bundles have been sold at around $425/mt CFR Chattogram. In addition, market rumors have indicated that 2,000 mt of US origin shredded scrap may have been sold at $410/mt CFR Chattogram, though no confirmation has been received by the time of writing. Overall, market sources have indicated that ex-EU/UK containerized scrap prices have moved slightly lower compared to pre-Eid levels, though the market has not shown any clear trend yet.