WEEKLY SCRAP WRAP: Domestic finished steel demand boosts Turkish scrap bookings
Turkish steel producers continued their deep-sea scrap bookings this week with the support of domestic finished steel demand, while Taiwanese import and US export prices went up with the latest trades heard during the period from Monday May 8 to Friday May 12.
Turkish steel mills enjoyed demand from their domestic finished steel market because of increased construction sector activity in the country.
Turkish steel mills booked six deep-sea cargoes for June this week, totalling 235,000 tonnes, according to various market sources.
A steel mill in the Marmara region booked a Baltic Sea cargo, comprising 22,000 tonnes of HMS 1&2 (80:20) at $272 per tonne, 3,000 tonnes of shredded at $277 per tonne and 10,000 tonnes of bonus at $282 per tonne cfr, on May 12.
Three steel producers booked five deep-sea cargoes on May 9.
A steel producer in the Izmir region booked a Baltic Sea cargo, comprising 24,000 tonnes of HMS 1&2 (80:20) at $272.50 per tonne and 6,000 tonnes of bonus at $282.50 per tonne cfr.
The same mill booked a second Baltic Sea cargo, comprising 23,000 tonnes of HMS 1&2 (80:20) at $272 per tonne, 6,000 tonnes of bonus at $282 per tonne and 1,000 tonnes of rail at $287 per tonne cfr.
Another steel mill in the Iskenderun region booked a Canadian cargo, comprising 35,000 tonnes of shredded and 15,000 tonnes of HMS 1&2 (90:10) at an average price of $279 per tonne cfr.
A third mill in the Marmara region booked two UK cargoes, each one comprising 45,000 tonnes of HMS 1&2 (80:20) at $270 per tonne cfr.
The mills in the country were expected to continue their deep-sea purchases for June.
“They have finished May bookings and are now buying for June. I think they will need more scrap for the month,” a Turkish source said.
“Strong domestic finished steel demand is also supporting deep-sea scrap purchases,” another Turkish source added.
Three bulk ferrous scrap trades from each US coast have been heard in the past week, but market chatter suggests that quiet export deals have been concluded as well – indicating that demand is healthier than previously believed.
On the US West Coast, an exporter sold a cargo to Pakistan on May 9 at $295 per tonne cfr for HMS 1&2 (80:20) and $300 per tonne cfr for shredded scrap.
Two days later, a US East Coast cargo was traded to Turkey at $275 per tonne cfr for HMS 1&2 (80:20), while a second East Coast exporter sold 40,000 tonnes of HMS 1&2 (80:20) to another Turkish buyer at $274 per tonne cfr.
“The Turks are pretty much covered for May, and they seem to have bought [a good amount] for shipment in June already. But the bunch of European sales at less than $275 [per tonne] for May delivery has stopped US [prices] from going higher than $275 for a while,” a trading source said.
Demand for finished steel and scrap in Turkey tends to slow down heading closer to the Islamic holy month of Ramadan, but this does not appear to be the case this year, as sources said that demand for rebar has been strong and prices are firm for the near future.
Import prices for USA-origin containerised HMS-grade ferrous scrap in Taiwan have moved up this week despite the confirmation of bookings of Chinese bulk scrap cargoes into the territory.
At least one deal for 3,000 tonnes of Chinese shredded scrap was heard closed in the East Asian island, with traders and buyer sources only differing on the concluded price.
One source heard that the small bulk cargo exchanged hands at $247 per tonne cfr, while a second one estimated the deal at $250 per tonne cfr. But most market participants spoken to by Metal Bulletin, including one who claimed to be involved in the deal, said that the final price was $255 per tonne cfr.
Rumours about Chinese scrap cargoes being exported or offered to neighbouring Asian countries, including India, have been puzzling the market for the past month, especially because of a hefty 40% export tax on ferrous scrap in China that in theory would make exports unviable.
Sources in China and Taiwan said that big volumes of scrap have recently been made available in the country because of the government’s crackdown on sub-standard steel products since late last year.
“This type of scrap was [formerly] sold to induction furnace [mills], but now they are shut down and nobody wants this kind of material in China any more,” one source in Taiwan said.
One buyer in Taiwan confirmed that one deal was closed at $255 per tonne cfr, but said it was for “testing” the quality of the Chinese scrap.
A second buyer source said that his company had also received offers and was “discussing” a possible booking.
Despite the pressure from competitive scrap from China in bulk cargoes, some electric arc furnace (EAF) mills in Taiwan were heard booking small volumes of USA-origin HMS 1&2 (80:20) at prices of $235-240 per tonne cfr.
“Most US suppliers don’t want to sell below $240 [per tonne cfr],” one trader in Taiwan said.
Prices for containerised ferrous scrap in India have fallen this week, with market sources expecting further drops due to poor consumption of finished steel.
A crash in prices for Indian domestic finished steel products and ferrous scrap grades over the past two weeks has placed significant pressure on import scrap prices.
“Markets in India are down, finished items are down [and] sales are low,” one seller said.
“Sales are not happening because buyers are expecting a $15-20 [per tonne] correction [in] scrap prices. It should happen by the end of the month,” he added.
“The [scrap] market internationally will take a sharp turn and go down by $15-20 per tonne. Finished steel is not moving at all,” another seller said.
Sources also said that the approaching monsoon season is already having a negative effect on prices and market sentiment.
“Next month, we will be running into the monsoon [season] and activity will fall,” one trader said.
The monsoon season will come between June and September 2017 and will bring considerable rainfall this year, according to Indian newspaper Business Standard.
Most offers for UK-origin shredded scrap were around $305 per tonne cfr Nhava Sheva at the beginning of the week, but one seller said on Friday that he did not expect to achieve sales of shredded material at more than $290 per tonne cfr.
One transaction for 10,000 tonnes of material was heard at $302 per tonne cfr Nhava Sheva, while a deal for 1,200 tonnes of UK-origin material was agreed at $300 per tonne cfr.
One deal for 500 tonnes of UK-origin HMS 1&2 (80:20) was closed at $270 per tonne cfr Nhava Sheva.
Offers for Middle East-origin HMS 1&2 (80:20) were heard at $270 per tonne cfr Nhava Sheva, while UK-origin material was offered to the market at $275-280 per tonne cfr.
Turkish steel mills were active in the short-sea markets, booking a number of A3-grade cargoes this week.
Deals for Romania-origin A3 scrap were heard concluded at $255-265 per tonne cfr Turkey, while Russia-origin A3 scrap was heard sold to Turkey at $260-265 per tonne cfr.
Turkish domestic ship scrap prices rose in line with higher imported scrap values, while auto bundle scrap prices remained largely unchanged at the beginning of the week.
Juan Weik in Singapore, Lee Allen in London, Nadia Popova in Moscow and Mei Ling Toh in New York contributed to this report.