WEEKLY SCRAP WRAP: Global prices fall, markets await next Turkish move
Global ferrous scrap prices continued to tumble in the week from Monday January 22 to Friday January 26, amid poor demand for Turkish rebar and weaker sentiment among traders.
Two fresh Turkish import deals were heard this week, with prices showing a further decline after last week’s drop.
A steel mill in the Iskenderun region booked a US cargo, comprising 12,000-15,000 tonnes of plate and structural scrap (P&S) at $373 per tonne and 6,000 tonnes of shredded at $368 per tonne, while the rest of the 38,000-tonne cargo was HMS 1&2 (80:20) at $363 per tonne cfr.
Those prices were down by $7 per tonne from the preceding cargo from the US East Coast, which traded to Turkey at $370 per tonne cfr on December 22.
A steel mill in the Marmara region then booked a Baltic Sea cargo, comprising 9,000 tonnes of HMS 1&2 (80:20) at $354 per tonne, 16,000 tonnes of shredded at $359 per tonne and 6,000 tonnes of bonus at $364 per tonne on January 24.
“I expect the mills in Turkey to book at least six or seven cargoes for February shipment,” a Turkish mill source said.
“It seems like Turkey has found a new market level, with a lot of dealers waiting to see if US vendors sell [at prices] below $360 per tonne cfr for HMS 1&2 (80:20),” one US source said.
Export yard buying prices and containerized shredded scrap prices along the United States’ East Coast came under downward pressure after recent cargoes sold into Turkey, market participants said.
Sources speculated that the Turkish cargo represented one US exporter’s attempt to “stir the market” by lowering bulk sale prices to Turkey, which would allow it to lower its dock buying prices on the East Coast.
Meanwhile, market participants were calm in the face of the fall in Turkish export prices. Some believed that there was still a little downside left to prices, while others said that US bulk export prices had reached a temporary floor.
“[Export prices to Turkey] could come down a little more. Prices often overshoot the top and the bottom of the market,” an export source said. “$350 to $360 [per tonne] is probably the Turkish market’s price point right now.”
But a second export source disagreed, noting that a shortage in the overall market due to the recent cold weather could keep bulk prices at current levels. “I don’t think there are ready cargoes, begging to be sold on the East Coast, and I don’t expect to see sales done below $360 [per tonne],” he said.
US exporters were fast to react to the dip in bulk cargo pricing, by lowering export yard buying prices immediately after the most recent sale to Turkey. Market participants were warned that prices could be cut further late this week or early next week.
Exporters in the Boston region trimmed buying prices for HMS 1 by $10 per gross ton to $285 per ton, while Philadelphia docks cut prices by $15 per ton to $300 per ton, and those in the New York area fell by $20 per ton to $295 per ton.
The price drop at the docks did not come as a surprise to coastal dealers but many indicated that they have yet to lower prices at the scales due to collection concerns.
“The exporters still need material and flows are still off in every region. Even with the higher prices, it is still hard to get flows back to where they are supposed to be,” an East Coast dealer said.
Buying activity for containers of shredded scrap arriving in India increased this week, with prices showing a slight decrease, market sources said.
Indian import scrap prices fell dramatically last week amid a large decline in Turkish import prices, but the subsequent price drop recorded this week in Turkey has had a limited effect in India.
A combination of the firming prices on the Indian subcontinent and a drop in Pakistani demand, due to softening local billet prices, has led to several thousands of tonnes of scrap being bought by Indian buyers this week.
Metal Bulletin’s weekly index for Indian import shredded scrap was $367.92 per tonne cfr Nhava Sheva on January 19, down by $3.71 per tonne week-on-week.
“There has been buying in Pakistan, but we have seen more going into India this week,” one UK seller said.
The majority of deals for shredded scrap were heard in the range of $365-370 per tonne cfr Nhava Sheva, including one deal for 12,000 tonnes to a specialist steelmaker for $368 per tonne cfr.
One factor supporting current buying activity is the healthy level of demand and stable pricing of finished steel in the country, sources said.
“Since the north Indian finished steel markets are pretty stable, there is an appetite [for scrap],” one consumer said.
Despite the liquid market for import shredded scrap this week, caution set in among traders as the week progressed, sources said.
“From yesterday, buying interest died down. It is a long weekend in India and people want to speak again on Monday,” one seller said, adding that he expected a further decrease in prices next week.
Import prices for containerized heavy melting scrap (HMS) in Taiwan dropped further over the week, due to a sharp increase in the number of cargoes being offered on the spot market.
Metal Bulletin’s price assessment for imports of US-origin HMS 1&2 (80:20) into Taiwan was $340-345 per tonne cfr for the week ended January 26, down by $8-15 per tonne from a week earlier.
Transactions were concluded within the assessment range, with buyers purchasing small quantities even as prices started to fall.
Sellers lowered their offers to $345-350 per tonne cfr this week and increased the volumes available for sale.
“US exporters had been holding on to cargoes for the longest time and have now let them loose in the spot market,” a Taiwanese trader said.
“Quantities have increased greatly, with numerous sellers offering sizeable cargoes of 1,000-4,000 tonnes,” a second trader said.
Spot demand was weak, sources said, and buyers were only willing to purchase limited volumes this week.
“Buyers have a bearish view and may not make any major purchases in the coming weeks because they believe prices will keep falling,” a third Taiwanese trader said.
Turkey domestic scrap
Turkish domestic scrap prices continued to increase amid strong demand on January 22. The increase came despite the slump in the country’s deep-sea import markets.
Cem Turken in Bursa, Mei Ling Toh in New York and Paul Lim in Singapore contributed to this report.