WEEKLY SCRAP WRAP: Global markets weaken amid decline in Turkish prices

Steel scrap prices in the major global markets have shown strong declines following the sharp fall in Turkish imported scrap values during the working week from Monday April 2 to Friday April 6.

Taiwanese and US scrap prices did remain stable but the pressure on US prices as strengthened over the week.

Turkey imports
Turkish import scrap prices fell sharply after steel producers managed to get lower prices from Baltic Sea and European suppliers, while merchants in the United States were effectively out of the market with higher offers.

Turkish steel producers resumed their deep-sea scrap purchases after the sharp decrease in prices on April 3.

A steel producer in the Marmara region booked a European cargo, comprising 15,000 tonnes of HMS 1&2 (75:25), 10,000 tonnes of shredded, 5,000 tonnes of a mixture of HMS 1 and plate and structural scrap (P&S), and 5,000 tonnes of new cuttings, at an average price of $358 per tonne cfr.

The same mill also booked a Baltic Sea cargo at $356 per tonne cfr for HMS 1&2 (80:20), while a steel mill in the Iskenderun region also booked a Baltic Sea cargo at $355 per tonne cfr for similar material.

As a result of these transactions, the daily scrap indices went down sharply on April 3.

Metal Bulletin’s daily index for Northern European HMS 1&2 (80:20) closed the day at $349.06 per tonne cfr, down by $17.99 per tonne day-on-day.

The daily index for similar US-origin material closed at $358.52 per tonne cfr, down by $18.11 per tonne day-on-day.

And after that price fall, Turkish mills continued to book deep-sea cargoes from Europe and the Baltic Sea.

A steel mill in the Marmara region booked a Baltic Sea cargo, comprising 19,000 tonnes of HMS 1&2 (80:20) at $356 per tonne, 9,000 tonnes of HMS 1&2 (90:10) and 5,000 tonnes of shredded at $361 per tonne, and 5,000 tonnes of bonus at $366 per tonne cfr on April 4.

A steel mill in the Marmara region booked a European cargo, comprising 17,000 tonnes of HMS 1&2 (75:25), 4,000 tonnes of bonus and 4,000 tonnes of busheling at an average price of $355.50 per tonne cfr late on April 5.

Another steel mill in the Izmir region booked a Baltic Sea cargo, comprising 13,500 tonnes of HMS 1&2 (80:20) at $353.50 per tonne and 4,000 tonnes of bonus at $363.50 per tonne cfr on April 6.

Market participants expected the Turkish mills to continue their deep-sea scrap purchases unless there is a very significant change in the prices, Metal Bulletin was told.

US exports
Ferrous scrap export prices from the US were facing downward pressure after last week’s bulk deals to Turkey, with containerized shredded scrap the first to show signs of distress while export yard buying prices were firm due to expectations of higher domestic scrap pricing in April.

There was little activity on the bulk export front, with no deals done from either the US East or West Coast this week. Turkish buying has been sparse since the country returned to the market a week ago, with mills there bypassing the US market in favor of more affordable material from Europe and the Baltic Sea.

Sources believe that it is difficult for US exporters to accept deals at these prices given what they are being paid at East Coast export yards, as well as an expected increase of $10-20 per gross ton from domestic consumers in the coastal region this month.

“I think the exporters are still short on scrap and they are calling for shipments. The domestic [producers] in Philadelphia are already talking to shredders for April [commitments],” a seller in both the domestic and export sectors said, noting that domestic demand in the coastal region was relatively healthy for April.

Exporters throughout the US East Coast kept HMS 1 buying prices at the docks at $315 per gross ton on April 4, according to American Metal Market’s price assessment, unchanged from the previous week. But one exporter in the Boston area was already hinting that price reductions might be seen soon due to the lower-priced trades to Turkey.

Meanwhile, the price of containerized shredded scrap on the East Coast caved in to the downward pressure due to “tepid” demand from international buyers, according to a broker source. Prices dipped to $350-358 per tonne fas from $358-365 per tonne fas a week ago.

“The container market has backed off and the [US] Gulf Coast shippers are going to sell to the domestic market this month. There may be more [shredded scrap] available in the region but I think demand [for this grade] is still very strong,” the coastal dealer said.

On the US West Coast, containerized HMS 1&2 (80:20) prices remained flat at $340-345 per tonne delivered to Taiwan, unchanged from the previous week. Many Asian nations, including Taiwan, are also away observing the Qingming festival.

Trading was limited this week with few offers from US dealers, but prices are expected to bounce back next week, an export source said.

Taiwan imports
Import prices for containerized HMS-grade scrap in Taiwan were stable this week due to a trading lull that resulted from consecutive public holidays.

Price negotiations were limited to only the first two days of this week, and no transactions were heard concluded.

“Spot prices have been on a downtrend since mid-March, so buyers are not anxious to buy cargoes this week. They are hoping for lower prices after the long holidays,” a Taiwanese trader said on Tuesday.

Taiwan was on holiday on Wednesday for Children’s Day and on Thursday and Friday for Qingming, or tomb-sweeping day.

“Market participants will come back next week and they will look out for new developments before negotiating for spot cargoes again,” a second Taiwanese trader said.

No major uptick is expected in scrap import prices due to the lull in the downstream rebar market in Taiwan, where demand is said to be lackluster, other sources said.

India imports
Trading activity in the Indian import scrap market will only pick up again if prices drop by at least $10 per tonne in the coming weeks, market sources told Metal Bulletin.

Disappointing domestic finished steel prices and uncertainty over the Section 232 import tariffs on steel in the US have caused consternation in the Indian scrap markets during recent weeks. Sources said that prices would have to move down further to give consumers the confidence to buy imported scrap.

“People will be back in the market within two weeks. Bangladesh is quiet, Pakistan is also not very active, so Indian prices could fall by $10-15 per tonne,” one seller said.

“I hope that, if prices go down, Indian buyers come into the market,” one consumer said.

“People want to wait until next week, because they think the Turkish market will come down more. There is lots of pressure in the US as well – they haven’t sold to Turkey for [more than] three weeks,” another seller said.

Around 3,000-4,000 tonnes of UK-origin shredded scrap was heard sold at $385 per tonne cfr Nhava Sheva, while a deal for 2,000 tonnes of material was heard at $395 per tonne cfr Kotchi.

One factor pushing Indian scrap prices downward, according to another buyer, is the low comparative cost for direct-reduced iron (DRI), commonly known as sponge iron in India.

“Shredded at $365-370 per tonne cfr would match the sponge iron price, so if there is a $10-15 per tonne correction, there might be more business in India,” he said.

Metal Bulletin’s price assessment for Indian domestic DRI was 21,500-21,700 rupees ($330-333) per tonne ex-works on Friday, up by 300 rupees per tonne compared with 21,200-21,400 per tonne ex-works one week ago.

Turkey domestic
Turkish domestic scrap prices fell at the beginning of the week amid softening imported scrap prices.

Metal Bulletin’s weekly price assessment for domestic auto bundle (DKP grade) scrap in Turkey was TRY1,270-1,500 ($315-372) per tonne delivered, down from last week’s TRY1,300-1,520 per tonne.

A number of steel mills and a major scrapyard reduced their buy prices for material over the week.

Ship scrap prices in the Turkish domestic market followed a similar downward trend.

Lee Allen in London, Mei Ling Toh in New York and Paul Lim in Singapore contributed to this report.