After Turkey’s import scrap market hit the bottom, it started to move up rapidly with each deal and moving above $370s/mt CFR this week. The main reason for the price increase has been the lack of scrap volumes for Turkish mills’ desired delivery periods. While Turkish producers have almost completed their purchases for December shipments, the situation on the supply side remains the same for January shipments.
As of today, December 2, an ex-Venezuela deal has been disclosed to the market as having been done by an Iskenderun-based producer with HMS I/II 80:20 scrap standing at $381/mt CFR. The total tonnage in the cargo is believed to be 32,000 mt and it will be shipped in December. Market players said the overall grade of this scrap cargo is very good.
While collection prices in the EU remain at €300-310/mt, one of the major EU-based scrap sellers commented, “The future price of scrap will be defined by the supply dynamics.” Some Turkish mills report that the pace of the uptrend is risky for all players, while it is not yet certain that scrap prices will be supported by finished steel sales. Turkey’s energy prices are a big obstacle to exports, diminishing Turkey’s competitiveness abroad. There are hopes of a stimulus package to support industries in the coming period.
Under the current conditions, deep sea benchmark HMS I/II 80:20 scrap in CFR terms has recorded a 4.4 percent increase week on week. The month-on-month increase is now 3.52 percent for the deep sea segment, with prices being in the range of $360-375/mt CFR.
For the past several weeks, scrap market sources throughout the US said they believed December prices had the potential to trend down for a variety of reasons, such as mills’ lagging capacity utilization rates, soft export prices, and continued downticks in finished steel prices.
This week, however, sellers have become more optimistic, and numerous sources polled said they feel a rising market could be in play. Their shift in sentiment is linked to several factors, including climbing US export HMS I/II 80:20 cargo sales prices to Turkey (which climbed from $339.50/mt CFR to $378/mt CFR in the span of two weeks) and this week’s flurry of flat rolled steel price increase announcements. The December buy-cycle is expected to start on Monday next week.
Having declined by €10/mt on average last week, the local Italian scrap market has remained stable in the current week. However, SteelOrbis has learned that some Italian plants are planning to take a break and hence they have decided to reduce their domestic scrap procurement prices by another €5-10/mt. The other producers that will continue operating are keeping their quotations stable to maintain scrap flow.
Despite the initial expectations of a movement in a narrow price range during November, domestic scrap prices in Germany have fallen significantly over the past month. According to one source, “This is a reflection of the decline observed on the export side, and also the lower demand received from German mills.” During September, local German scrap prices did not follow the global trend and indicated a relatively stable trend, hence the decrease recorded in November was larger compared to other regions.
According to the latest data provided by the BDSV, in the first 20 days of November scrap prices in Germany moved down by €5.3-21.2/mt month on month.
As trading and production rates have slowed down in the local Polish steel market, domestic scrap prices moved down just slightly over the month of November. “The economic situation is taking its toll on prices. Collection is very slow and there is a lack of scrap all over the EU,” one scrap supplier commented. While inflation in Poland is causing personal consumption to slow down, lower production rates in the industrial segment are leading to lower scrap generation.
During the past month, prices in the local Polish market for HMS I scrap have moved down slightly to €335-340/mt DAP on average.
The main EAF-based steel producer in Japan, Tokyo Steel, has continued to cut its local scrap procurement prices amid the ongoing sluggishness of demand in the local market in Asia. Tokyo Steel has reduced its scrap prices for all plants by JPY 500/mt, though the appreciating Japanese yen has caused dollar-based quotations to increase instead. While some South Korean mills are heard to be returning to the Japanese scrap market, SteelOrbis hears that they are only testing the waters at present.
Tokyo Steel’s general range for H2 grade scrap has come to JPY 45,000-46,500/mt ($326-337/mt), depending on the mill.
As SteelOrbis reported previously, South Korean producers are testing the waters for Japanese scrap by returning to the market after a long break. The import scrap market in South Korea has been silent over the past month and all mills have been relying on local scrap supplies, the prices of which were falling continuously.
Major South Korean producer Hyundai Steel shared its bids for Japanese H2 scrap at JPY 43,000/mt ($310/mt) FOB on November 30. The previous bid from Hyundai Steel for Japanese scrap was announced on October 5 at JPY 48,000/mt ($332/mt - exchange rate at JPY 144.51 to a dollar) FOB.
Hyundai Steel also released bids for ex-Japan H1/2 scrap at JPY 43,500/mt ($314/mt) FOB and for HS scrap at JPY 47,500/mt ($343/mt) FOB.
The SteelOrbis reference prices for ex-Japan H2 scrap have moved down slightly by JPY 100/mt on the lower end and by JPY 900/mt on the higher end to JPY 43,000-45,000/mt ($310-325/mt) FOB. The dollar equivalent of prices has been stable or up $5/mt over the past week, considering the currency fluctuations.
A slight demand acceleration has been observed in the Vietnamese scrap market, which is impacting scrap prices positively. “There is a recovery of demand in Vietnam, providing some support for scrap prices. Since some mills need to collect more scrap before the Chinese New Year holiday, the Vietnamese scrap market may improve further,” a Vietnamese source commented.
Ex-Japan offers for H2 scrap to Vietnam have been reported at $375-380/mt CFR, offers for ex-Hong Kong HMS I/II 50:50 scrap by bulk to Vietnam are at around $360/mt CFR. This week, offers of bulk HMS I/II 80:20 scrap cargoes from the US West Coast to Vietnam are at around $400/mt CFR.
As the international scrap market is moving up rapidly following Turkey’s lead, suppliers to Taiwan are increasing their scrap offer price levels to this destination, while they are also taking a step back, citing lower allocation and their expectations of a rise in prices. Most players in Asia are back in the market this week, seeking ex-US and ex-Japan scrap, which also supports sentiment. The upward trend of Taiwan’s import scrap market is expected to continue in the coming week.
Tradeable price levels for ex-US HMS I/II 80:20 scrap in containers to Taiwan are considered to be at $340-345/mt CFR. Moreover, offers for Japanese H1/2 50:50 scrap by bulk to Taiwan moved up to $365/mt CFR from the $345-350/mt CFR in deals last week.
