WEEKLY SCRAP WRAP: Falling steel prices in China hit global scrap markets

Scrap prices in the global markets continued to go down during the working week from Monday April 17 to Friday April 21, with falling steel prices in China.

Turkish steel mills have remained mostly out of the deep-sea scrap markets, booking only two deep-sea cargoes in the past two weeks, while demand in Taiwan and the USA was also weak.

Turkey imports
The Turkish market has been quiet in the past two weeks amid the political uncertainty surrounding the constitutional referendum held on April 16, while suppliers in the Europe were on their Easter holidays.

Only two deep-sea deals were heard recently.

A steel producer in the Izmir region booked a Baltic Sea cargo, comprising 21,000 tonnes of HMS 1&2 (80:20) at $265 per tonne, 5,000 tonnes of bonus at $275 per tonne and 1,000 tonnes of rail at $280 per tonne cfr, on April 14.

The same mill booked a second Baltic Sea cargo, comprising 30,000 tonnes of HMS 1&2 (80:20) at $267 per tonne and 5,000 tonnes of bonus at $277 per tonne cfr, on April 12.

Market participants expected mills to resume their deep-sea scrap purchases after Turkey’s referendum.

Some 51.30% of votes were cast to approve the package of constitutional amendments put forward by the ruling Justice & Development Party (AKP) that will create an executive presidency to replace the parliamentary system.

However, both the scrap and finished steel markets remained quiet after the referendum result was known.

“Everybody is asking about the market, but there is no trade activity at the moment,” a Turkish source said.

“Turkish mills should begin buying scrap again as stocks are low,” another Turkish source added. “There are offers from various sources at around $275 per tonne cfr for HMS 1&2 (80:20) but there are no takers.”

USA exports
The US bulk ferrous scrap export market remains at a standstill with no trades heard off either coast, although increased container sales to India provided some buzz in an otherwise stagnant market.

No cargoes have been sold from the US East Coast to Turkey since early April, when a bulk deal was made at $276 per tonne cfr for HMS 1&2 (80:20) scrap, $281 per tonne cfr for shredded and $286 per tonne cfr for bonus-grade scrap.

“Turkish rebar selling prices are dropping because of low demand and the weakness of the lira. But I think their scrap imports won’t be [affected] in the short term, because they need material,” an international trading source said.

“It is a rather directionless market right now. If you look at global macro factors, [the price of] iron ore is down significantly, we are seeing a dramatic drop in Chinese steel prices, and we have heard about Chinese billet [being] offered into the Middle East,” a second trading source said.

These uncertainties sent many market participants to the sidelines to weather the storm, with no indication of where offer prices currently stand.

Sources said that inventory levels at docks have been low and that there was not enough material on the ground to quickly fill a vessel.

Despite the lack of activity in bulk exports, there has been improved demand from Indian buyers over the past two weeks. Market participants indicated that containerised shredded scrap has been trading actively at $265-280 per tonne fas on the US East Coast and US Gulf Coast.

“The Indians are in ‘buy’ mode, and that is always a positive sign. If they are buying at those prices for shredded in a [container], it suggests that bulk prices could head that way,” a third trading source said.

Taiwan imports
Import prices for containerised HMS-grade ferrous scrap in Taiwan have fallen for the sixth consecutive week, with the plunge in China’s billet and long steel prices adding further pessimism to the market.

Market sentiment in Taiwan has been affected by the lower prices for steel products in China, particularly billet, which approached numbers close to $400 per tonne cfr in Southeast Asia early this week.

Even though bookings had yet to be heard in the market, the low offers have resulted in a “difficult moment” for Taiwanese billet re-rollers and electric arc furnace (EAF) mills, one Taipei-based trader said.

“They don’t know whether they buy [billet] or not,” the trader said, adding that bids were nevertheless heard at $370-375 per tonne cfr.

A second trader said that whenever the price gap between imported billet and imported ferrous scrap is lower than $150 per tonne, some Taiwanese EAF operators would consider booking the semi-finished steel product.

This is because the average cost to convert scrap into billet in Taiwan has been around $150 per tonne.

“The scrap market is bad everywhere – but Taiwan is definitely the worst,” one local trader pointed out, saying that transaction prices for imported containerised cargoes in the East Asian island were the lowest in the region.

Turkey domestic

Turkish domestic ship scrap prices increased at the beginning of the week as mills raised their purchasing prices in line with stronger demand, while auto bundle scrap prices remained stable.