The lack of deep sea scrap cargoes has continued for the third week in Turkey’s import scrap market, causing uncertainties to intensify. The general expectation in the market is for a downward revision of prices, though market players are becoming more cautious in voicing levels with each passing day. The European HMS I/II 80:20 scrap price is estimated at around $600-610/mt CFR, while quotations for this grade of US and Baltic origin are expected to be around $615-625/mt CFR. “There can be lower prices fixed in the first deals, and no one will be surprised,” a supplier commented. SteelOrbis hears that there are still no price inquiries by Turkish mills, who are still struggling to sell finished steel. Several market players voiced their expectations of a recovery in both finished steel and scrap demand after the end-of-Ramadan holiday (May 1-4). “There is postponed rebar demand, but one must not forget the negative impact of higher costs and inflation on the construction sector,” a Turkish mill commented. A flat steel producer stated that it is a matter of finance. “Prices have risen too much, the output sale-input purchase balance is monitored closely by producers.” Under the current conditions, the benchmark HMS I/II 80:20 scrap in CFR terms recorded a 3.92 percent decrease week on week. The month-on-month decline is now 6.91 percent in the deep sea segment, with prices in the range of $600-625/mt CFR.
The sentiment in the local US scrap market has taken a turn this week. “[Turkish mills] haven’t booked any cargoes out of the US in the past couple of weeks, and it seems like the cheap billet that’s flowing into Turkey out of Russia is placing downward pressure on the market,” a source said. Lagging scrap bookings from Turkey, still-strong inflows into scrap yards, and improved springtime weather are also impacting the market. “The [exporters] have been dropping their prices pretty aggressively for the past 10 days,” the source continued. “They dropped their prices by $20/gt last week, they dropped them by another $20/gt this week, and we expect they’ll take prices down again within the next few days.” A $40-50/gt decrease for HMS, shredded scrap, and P&S scraps is expected for May buy-cycle in the US.
The local German scrap market has moved up further in April, seeking to catch up with the strong export prices from the EU region. Local scrap prices in Germany were close to the export quotations at the end of March, and through the month of April German mills have increased their domestic scrap procurement prices further to the levels of export prices to be able to secure tonnages. However, with the sentiment changing in the international scrap market, the estimations for the local German scrap market have also turned negative. SteelOrbis observes that export yards in the Netherlands have slowed down their scrap purchases over the past weeks. As a result, some German suppliers state that they have also decreased their collection prices. “Despite the decreases in quotations, the flow to our yards is good. For example, we reduced our collection prices by €50/mt and the flow only decreased by 30 percent.” However, there is concern about the production utilization rates in Germany for May, one source commented, adding, “Some mills have already cut their utilization rates by 25 percent and there are rumors that others will follow suit in May. If this happens, domestic scrap prices may move down by another €30/mt.”
After surging in February and March, domestic scrap prices declined in the Italian market this week and should decrease further in the coming period, according to sources. In fact, scrap demand has been slowing down in the past few weeks on the back of reduced production utilization rates at local mills and weak finished product sales. Moreover, the sentiment has worsened amid the price trend reversal in the international scrap market, with HMS I/II 80:20 import prices declining by almost seven percent in Turkey in the past month. "The downtrend has begun also because prices had reached levels that were too high and so finished steel prices had also reached impossible levels," one local scrap trader commented. According to several sources, prices have decreased by about €20/mt so far, and will decrease further in the coming week, although the total amount of such a decrease is yet to be seen.
On April 18, the main EAF-based steel producer in Japan, Tokyo Steel, decided to keep its scrap procurement prices stable week on week, except at its Utsunomiya plant, where H2 and shindachi scrap prices have increased by JPY 500/mt. With the ongoing depreciation of the Japanese yen, the sideways movement of local scrap prices was accompanied by a decline in dollar-based quotations. Tokyo Steel’s new price levels for H2 scrap are now in the range of JPY 64,500-66,500/mt, JPY 500/mt higher on the upper end. On dollar basis, the prices in question have declined from $514-526/mt to $510-525/mt week on week.
As of April 21, Japanese mills’ procurement prices for H2 grade scrap were in the range of JPY 65,000-67,000/mt ($508-523/mt) DDP, for HS grade scrap, at JPY 69,000-72,000/mt ($539-562/mt) DDP and for shindachi scrap at JPY 71,000-75,000/mt ($554-586/mt) DDP. SteelOrbis has also learned that Tokyo Steel has bought a small cargo of H2 grade scrap at JPY 68,500-69,000/mt ($535-539/mt) CFR or JPY 67,000/mt ($523/mt) FOB.
The downward pressure Vietnamese steelmakers were exerting on import scrap quotations for some time has succeeded this week. With the absence of South Korean buyers in the market as well as the relatively stable trend observed in the Japanese market, Vietnamese buyers have managed to close deals at significantly lower price levels. Import scrap prices have decreased to the levels Vietnamese buyers had been voicing for some time and then moved down further. Ex-US bulk HMS I/III 80:20 scrap was sold to Vietnam at $600/mt CFR this week, which is significantly lower than the offer levels of $625-630/mt CFR reported last week. Meanwhile, prices from Japan to Vietnam for H2 grades have also decreased to $600/mt CFR from $615-630/mt CFR week on week in deals. Ex-Hong Kong HMS I/II 50:50 scrap has been sold to Vietnam at $590/mt CFR. Hong Kong was out of Vietnamese market for some time, and the current price levels are $15/mt lower than the levels recorded on March 23.
For the second consecutive week, both major South Korean steel mills Hyundai Steel and POSCO have decided to skip announcing new bids for Japanese scrap. SteelOrbis has learned that domestic scrap flow to the mills is still strong despite the reductions in prices. South Korean mills normally buy 70 percent of their scrap needs from their local market. SteelOrbis understands that finished steel demand in South Korea is still on the good side, hence mills are not sure if they can maintain this lower price policy for long. “We need to see what foreign scrap suppliers will decide.If they decrease their prices to competitive levels in the coming period, we may restart imports,” a mill commented. A SteelOrbis source reported that indications for ex-US bulk HMS I scrap offers to South Korea are standing at $615/mt CFR this week, which is $10/mt lower than the level recorded in Hyundai Steel’s most recent ex-US purchase reported on April 5.
Taiwan’s import scrap prices have continued to decrease through the current week, while producers report good scrap flow in their domestic market. “We have bought most of our needs, so we are in no rush to conclude deals, particularly for Japanese scrap,” a source at a major mill commented, adding that with Vietnam and South Korea staying out of the market Japanese scrap prices are set to decline further in the coming period. Taiwan also has the Labor Day holiday at the beginning of May, which will have an impact on scrap demand too. Prices recorded in deals for ex-US HMS I/II 80:20 scrap in containers in Taiwan have decreased from $555/mt CFR to $535/mt CFR week on week. Japanese H1/2 50:50 scrap by bulk has been offered to Taiwan at $560/mt, as compared to $585-590/mt CFR recorded last week.
In Pakistan, trade activity in the import scrap market has remained limited this week due to the continuing political instability in the country and weak finished steel sales during Ramadan. Most offers are standing at $650-655/mt CFR, down by $10/mt week on week, and some offers have already been voiced at $645/mt CFR. Meanwhile, after shredded 211 scrap of UK origin in containers was sold last week at $655-660/mt CFR, a new deal for around 3,000 mt of ex-UK scrap has been reported at $648/mt CFR this week. At the same time, ex-US shredded scrap is said to be available at $642/mt CFR, while offers for ex-UAE HMS I scrap have been voiced at $600/mt CFR, down by $5-10/mt over the past week.
Import scrap offers have continued to drop further in Bangladesh this week, though end-users in the country are very reluctant to accept new prices amid still low demand. Besides, Bangladeshi scrap customers have reported difficulties in opening letters of credit (LCs) amid the recent ruling of the central bank regarding deposits at least 25 percent of total import payments when opening LCs. Accordingly, in the containerized scrap segment, most offers have decreased over the past week. Offers for ex-UK shredded scrap have been reported at $655-660/mt CFR, down by $15-20/mt over the past week, while customers’ bids have been already voiced at $630/mt CFR. Ex-US HMS I/II 80:20 scrap has been offered at $620-625/mt CFR, while offers for ex-UK HMS I/II 80:20 have been voiced at $625-630/mt CFR, with a deal signed at $628/mt CFR this week. Meanwhile, at the beginning of the week, new ex-US scrap bulk offers have decreased to $640/mt CFR, down by $10-20/mt week on week, though by the end of the week market insiders have reported new offers at $625/mt CFR Chittagong. However, even despite the significant discounts provided by sellers, no deals have been reported so far.