WEEKLY SCRAP WRAP: Global prices push up on tight supply
Global scrap prices continued to increase in the week from Monday November 27 to Friday December 1, with seasonal factors squeezing material availability.
Turkish mills dipped into the market to begin bookings for January material this week, with prices recording a rise in comparison with last week.
Prices for scrap exports from the United States, Indian import scrap and Taiwan import scrap also rose as market participants across the globe turned bullish over the short-term direction of markets.
Prices jumped upward on Monday when a steel mill in the Iskenderun region booked a Baltic Sea cargo comprising HMS 1&2 (80:20) at $323 per tonne, shredded at $328 per tonne and bonus at $333 per tonne cfr.
Then on Tuesday, a steel producer in the Iskenderun region booked a European cargo, comprising 20,000 tonnes of HMS 1&2 (75:25), 9,000 tonnes of shredded, 9,000 tonnes of plate and structural scrap (P&S) and 2,000 tonnes of busheling at an average price of $322 per tonne cfr.
Turkish mills left the market at the end of the week, but market sources thought that prices could continue to increase over the coming weeks.
“The winter [weather] is raising the collections costs. I think the market will remain firm for January,” a Turkish source said.
“The market is still firm and expectations are bullish. Turkish mills will book more scrap as soon as they see demand for rebar in the export markets,” a second Turkish source said.
“Chinese steel prices are becoming firmer with the demand in the country’s domestic market,” another Turkish source said. “This should support the scrap prices in Turkey.”
US ferrous scrap export prices moved up after the American Thanksgiving holiday, thanks to strong demand from Turkish and South Korean mills fueling expectations for scrap prices to increase further in the near term.
Four cargoes – two from the US East Coast and two from the West Coast – have been sold from the US to Turkey and South Korea in the past seven days.
One US exporter sold two cargoes to Turkey at $321 per tonne cfr for HMS 1&2 (80:20), up by $7-8 per tonne from the prices of the four cargoes booked in the preceding week at $313-314 per tonne cfr.
Two cargoes of HMS 1 were sold to South Korean producers this week at $350 per tonne cfr. Prices were up by $25 per tonne from the latest cargo sold to South Korea at $325 per tonne cfr early this month.
Higher export prices to South Korea were driven by a mix of factors, including strong order books, low scrap inventory at the mills, and increases in local scrap prices, according to sources.
Bulk export prices to Turkey were rumored to have increased further, with speculations of quiet deals from the Baltic Sea region said to have been done at $330-340 per tonne.
Sources said US and Baltic Sea exporters were now seeking $335 per tonne cfr for cargoes of HMS 1&2 (80:20).
“Going by recent sales, the Turks are pretty hungry for material. It is interesting to see how much further prices will rise,” a broker source said. “This is a good time to buy - especially if you think things will be up in 2018, which no one seems to be pessimistic about so far.”
A processor source also believed that export prices will continue to rise. “I do think there are more increases in store for exports, but it may not be before the December cycle [for US domestic price settlements] begins,” this source said.
Prices for imports of ferrous scrap into India in containers gained traction this week amid better demand for finished steel and tighter supply at exporter yards.
Activity has increase in the Indian import scrap market in recent weeks because mills have bought material to bolster their previously low stock levels.
“Demand from factories is picking up because there is huge shortage of scrap locally. Finished [steel] prices are also improving and sales are picking up, with inventories being cleared,” one seller said.
“There will be a shortage of scrap until the middle of January,” one trader said.
Metal Bulletin’s index for imported shredded scrap rose to $335.88 per tonne cfr Nhava Sheva on Friday, up by $2.42 per tonne from last week’s $333.46 per tonne cfr.
Around 7,000-8,000 tonnes of containerized shredded scrap from mixed origins was heard sold to a large Indian customer at $335 per tonne cfr Nhava Sheva.
Deals for United Kingdom-origin material were heard in the range of $332-342 per tonne cfr Nhava Sheva, including transactions heard for 700 tonnes, 1,000 tonnes and 2,000 tonnes.
Market sources were bullish over the near-term outlook for import prices to India.
“The Indian markets look like they will increase further, owing to a shortage of scrap and good demand [for] finished products,” a seller said.
“Prices may move up by $5-10 per tonne maximum in December,” according to one buyer, but he added that he does not expect to see much more buying activity before the end of the year.
“People have already covered their requirements for this month,” he said.
Taiwan’s prices for imports of containerized HMS-grade ferrous scrap continued on a bullish trend for the sixth consecutive week as tight supply and global price increases supported trading values.
“Supply remains tight because traders have not been offering actively, expecting prices to move up in the near-term,” a Taiwanese trader said.
Metal Bulletin’s price assessment for imports of USA-origin HMS 1&2 (80:20) into Taiwan was $305-315 per tonne cfr for the week ending December 1. This was up by $1-5 per tonne from the previous week.
Negotiations for US-origin HMS 1&2 (80:20) were within the range of $305-315 per tonne cfr Taiwan. Offers of similar material from the US were $315-317 per tonne cfr Taiwan.
A key buyer purchased about 6,000 tonnes of imported scrap at close to $310 per tonne cfr Taiwan. Other market sources said that there were also deals done at $306-308 per tonne cfr Taiwan.
Bids have risen since last week, with buyers indicating that they were willing to purchase cargoes at $310 per tonne cfr Taiwan in view of possible future price rises.
Trading sentiment was bullish, with many market participants expecting prices to continue climbing in the near term while China’s production cuts continue unabated and long steel prices in other Asian markets increase.
Turkish domestic auto bundle scrap prices continued to rise in the wake of an uptick in imported scrap values.
Metal Bulletin’s weekly price assessment for domestic auto bundle scrap in Turkey was TRY1,105-1,270 ($280-322) per tonne delivered, widening upward from last week’s TRY1,105-1,245 per tonne.
The upward movement in the assessment came after three steel mills raised their buy prices by TRY20-50 per tonne over the past week.