WEEKLY SCRAP WRAP: Global scrap prices continue to rise slowly

Global scrap markets were looking for a clear direction, with international prices inching upward, while demand was moderate during the working week from Monday June 19 to Friday June 23.

Turkish steel producers booked deep-sea scrap at a slow pace during the final week of the Islamic holy month of Ramadan, while the Taiwanese market was unclear because of a local price drop.

Turkey import
Turkish mills booked three deep-sea cargoes, totalling almost 100,000 tonnes this week.

A steel producer in the Iskenderun region booked a Baltic Sea cargo, comprising 22,500 tonnes of HMS 1&2 (80:20) at $277 per tonne and 2,500 tonnes of bonus at $287 per tonne cfr.

Another steel mill in the Marmara region booked a European cargo, comprising 20,000 tonnes of HMS 1&2 (75:25), 10,000 tonnes of bonus, 7,500 tonnes of shredded and 2,500 tonnes of busheling at an average price of $279.50 per tonne cfr.

A second steel producer in the Marmara region booked a Baltic Sea cargo, comprising 27,000 tonnes of HMS 1&2 (80:20) at $281.50 per tonne, 3,000 tonnes of shredded at $286.50 per tonne and 5,000 tonnes of bonus at $291.50 per tonne cfr.

With the news of these three deals, Metal Bulletin’s daily scrap indices gradually climbed through the week.

Expectation of better rebar demand in the country’s export markets after Ramadan, and strong domestic demand from the construction sector, led Turkish mills to book more scrap, as their inventories were low.

“Scrap stock levels are still low and [the mills] will need to book more scrap. Domestic rebar demand is still strong and is forcing the mills to book more scrap,” a Turkish source said.

“I think the mills [in Turkey] expect a further price increase after Ramadan and want to secure material before that,” a European source said.

“I think the HMS 1&2 (80:20) price will exceed $290 per tonne soon,” another Turkish source said.

“Buying scrap is more profitable than buying billet, and at least ten more mills are in the market to buy scrap at the moment,” he added. “Domestic rebar prices are expected to reach $500 per tonne after Ramadan.”

Meanwhile, Turkish scrap import volumes continued to rise as output from the country’s electric arc furnaces (EAFs) rose in January-April this year, according to the Turkish Statistical Institute (TÜIK).

Turkey imported 5.93 million tonnes of ferrous scrap in the first four months of the year, which was 7.19% more than the 5.53 million tonnes imported in the corresponding period of 2016.

Turkey’s crude steel production using EAFs reached 7.99 million tonnes in January-April, up by 16.43% from 2016’s 6.87 million tonnes, the Turkish Steel Producers Assn (TÇÜD) said.

USA exports
US East Coast ferrous scrap export prices were stable with no new sales to Turkey, but a US West Coast sale to Bangladesh hinted at a possible increase in prices in the near term.

A West Coast cargo containing 30,000 tonnes of HMS 1&2 (80:20) scrap was sold to a Bangladeshi buyer at $295 per tonne cfr.

Bangladeshi buyers are looking to purchase more vessels over the summer and are actively shopping in the USA, sources said.

If demand for bulk scrap continues to emerge from these markets, this could potentially prop up US prices, an export source predicted.

“If Turkey does come in and these other markets stay aggressive, then the market could run up again. If this happens and export picks up, we probably won’t see the dip [in prices] that we usually see in July,” he said.

Trader sources indicated that multiple Turkish buyers were in the market, looking for material, and that US scrap was on offer, but sellers were said to be relatively quiet.

Taiwan imports
The import market for containerised HMS-grade ferrous scrap in Taiwan became uncertain this week after local mills cut their domestic buying prices for the steelmaking raw material even as the international market moved upward.

On Thursday, Taiwanese electric arc furnace (EAF) steelmaker Feng Hsin Steel announced a decrease of NT$200 ($7) per tonne on its domestic ferrous scrap purchase price, which surprised many market participants.

The local rebar market has been also very slow, with news that a few small suppliers have already reduced their sales prices for the finished steel product this week, the source added.

Against that backdrop, limited buying interest was heard in the market for imported cargoes of HMS 1&2 (80:20) from the USA.

Bids from at least one buyer were heard as low as $245 per tonne cfr, even though others were still giving indications around $250 per tonne cfr, sources said.

Small volumes changed hands at $250-251 per tonne cfr, according to some sources.

Most US suppliers, however, were not willing to sell for less than $255 per tonne cfr.

And offer prices for Japanese H2-grade bulk cargoes have been around $265 per tonne cfr this week in Taiwan, which means that $255-260 per tonne cfr for US cargoes is “actually a good price”, one of the traders contacted by Metal Bulletin said.

India imports

Low stock levels will force steelmakers in India to ramp up their purchases of ferrous scrap but only after a reform of India’s tax system comes into force next month.

Market participants are reluctant to buy and sell imported scrap before India’s general sales tax (GST) comes into force on July 1, 2017, but they will spring into life after the reform is in place, sources said.

“One week after [the GST starts], Indians will have to come back into the market because stocks are very low,” one seller said.

“People must start [buying] after the introduction of GST, [but] until then it will remain slow and quiet,” a trader said.

Metal Bulletin’s index for containerised shredded scrap imports in India was $296.77 per tonne cfr Nhava Sheva on Friday June 23, up by $1.69 per tonne week-on-week.

The price change was the result of better conditions in the Turkish import scrap market, along with a slight increase in the number of enquiries from buyers despite a lack of orders placed, sources said.

“People are asking for cargoes right now. Suddenly, people are calling me to ask if we have material,” another trader said.

But other market sources were not convinced that prices for HMS-grade scrap would continue to rise after July.

“If I look at history, July is the slowest month in Europe, [the price of] iron ore is not moving up [and], because of the monsoon, it is typically a slow month in India,” another seller said.

Offers of EU-origin shredded imports were heard at $300-305 per tonne cfr Nhava Sheva this week, while US offers were heard at $295 per tonne cfr and UK-origin material at $300-305 per tonne cfr.

Turkey domestic
Turkish domestic scrap prices showed mixed dynamics at the beginning of the week as domestic auto bundle scrap prices went down slightly, while ship scrap prices went in the opposite direction.

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