SOUTH ASIA STEEL SCRAP: Markets jump after Turkish price exceeds $500

Prices for shredded steel scrap imported into South Asia jumped in the week to Friday May 14 following a large increase on the international scrap market, sources have told Fastmarkets.

Fastmarkets calculated its steel scrap, shredded, index, import, cfr Nhava Sheva, India, at $510.55 per tonne on Friday, up from $478.96 per tonne one week earlier.

Just one deal was heard at $510 per tonne this week, compared with an offer level of $475-485 per tonne one week before, while this week offers ranged from $500 to $525 per tonne cfr.

“India is expecting hiccups [in the market] because secondary steel producers have cut production due to Covid-19 and there are issues with labor and transport. There is a sense of fear and a lack of available drivers. Domestic scrap has been a problem for the past two weeks,” a buyer said.

He added that domestic HMS was on offer at 37,000 rupees per tonne this week, equivalent to $502 per tonne, with an additional $27 per tonne for delivery.

Some steel mills in the country have reduced or stopped producing after diverting oxygen supplies to hospitals for medical use due to the Covid-19 situation in the country.

This week, scrap prices on the Turkish market rose past $500 per tonne, reaching a 10-year high. This pushed up scrap prices on other global scrap markets.

Fastmarkets’ daily index for steel scrap, HMS 1&2 (80:20 mix), North Europe origin, cfr Turkey, was $502.25 per tonne on May 14, up from $488.83 per tonne on May 7.

“Many factors have cut down production, with mills now at 60-70% capacity. There is a shortage of oxygen and no demand in the finished steel market,” a seller said.

“Labor is becoming an issue in some places, so there is a combination of factors and a little nervousness in the market due to Chinese futures. Once the Eid [holiday, marking the end of Islam’s Ramadan] is over, we will see how the markets behave,” he said.

“Shipbreaking has shut down with no oxygen to cut scrap, so there is activity in the local market. Local scrap prices have shot upward, and in imports some shipping lines have refused to come to India, fearing that their vessels would be stuck due to port closures,” he added.

Market participants told Fastmarkets that some deals for billet exports were stuck because sellers could not find vessels that would go to China.

Those who were on the Indian and Pakistani markets reported concern over the recent fall in Chinese futures, which was linked to government intervention in rising finished steel prices.

Fastmarkets’ weekly price assessment for steel scrap, HMS 1&2 (80:20 mix), import, cfr Nhava Sheva, India, was $465-490 per tonne, up from $440-465 per tonne one week earlier.

There were very few offers of HMS material on the market this week due to the Eid holidays in several locations.

“There is complete lockdown here,” a mill source said. “We have stopped producing now, because there are no sales and we can’t afford to buy [raw materials] at these prices.”

One trader said that demand was quite suppressed, but expected it to pick up in the coming weeks.

On the Pakistan scrap market, despite being closed for the Eid holiday, deals were heard throughout the week at increasing prices.

Fastmarkets calculated its weekly steel scrap, shredded, index, import, cfr Port Qasim, Pakistan, at $512.59 per tonne on May 14, up from $487.67 per tonne on May 7.

On Friday last week, the market was preparing to cross the $500 per tonne mark for shredded material, and this had been achieved by the start of the current working week.

At the beginning of the week, deals were heard at $500-505 per tonne, $508-509 per tonne and $510 per tonne, before rising toward the week’s end, with several deals heard at $518 per tonne.

This compared with a deal level of $486-492 per tonne the week before.

“Offers are there but we saw no acceptance because customers were resisting a little. We will have more clarity once the Eid holiday is over,” a trader said.

“Prices should be higher and most offers are at $525-530 per tonne, but no mills are ready to pay that,” a seller said. “It’ll come very shortly – on Monday after the Eid.”