WEEKLY SCRAP WRAP: Global scrap prices dip on buyer resistance except in Taiwan
Scrap prices in major global markets trended downward during the working week from Monday July 10 to Friday July 14, as mills in most import markets successfully fended off further price increases.
Turkish import scrap prices dipped when seven cargoes were transacted on July 13, and this downward movement was mirrored in the Indian import markets. However, the Taiwanese import markets pushed upward, bucking this trend.
After a brief hiatus, Turkish mills emerged successful from negotiations to secure seven cargoes from the Baltic Sea and Europe at slightly lower prices on Thursday.
A steel producer in the Marmara region booked a European cargo, comprising 22,000 tonnes of HMS 1&2 (75:25), 5,000 tonnes of shredded, 2,000 tonnes of HMS 1, 9,000 tonnes of bonus and 2,000 tonnes of busheling, at an average price of $296 per tonne cfr.
The same mill also booked a UK cargo, comprising 20,000 tonnes of HMS 1&2 (80:20) at $293 per tonne and 25,000 tonnes of shredded at $303 per tonne cfr.
A steel mill in the Iskenderun region booked a Baltic Sea cargo, comprising 25,000 tonnes of HMS 1&2 (80:20) at $296 per tonne and 5,000 tonnes of bonus at $306 per tonne cfr.
The same mill booked a UK cargo, comprising 30,000 tonnes of HMS 1&2 (80:20) at $295 per tonnes, 5,000 tonnes of shredded at $300 per tonne and 5,000 tonnes of bonus at $305 per tonne cfr.
A steel mill in the Marmara region booked a Baltic Sea cargo, comprising 27,000 tonnes of HMS 1&2 (80:20) at $298 per tonne, 3,000 tonnes of shredded at $302 per tonne and 5,000 tonnes of bonus at $307 per tonne cfr.
A second steel mill in the same region booked another Baltic Sea cargo, comprising 40,000 tonnes of HMS 1&2 (95:5) at $303 per tonne cfr.
The same mill booked a second Baltic Sea cargo, comprising HMS 1&2 (80:20) at $296 per tonne, shredded at $301 per tonne and bonus at $306 per tonne cfr. The breakdown for this cargo was not clear at the time of publication.
US ferrous scrap export prices were stable, with no fresh USA-Turkey trades since July 5.
Offer prices for US cargoes reached $300 per tonne for HMS 1&2 (80:20), sources said, and one US supplier was said to be offering a full cargo of shredded scrap to Turkey at $305 per tonne cfr.
“I think there is room for a little increase but not much more,” a trading source said. “The ceiling should be around $300-310 [for HMS 1&2 (80:20)]; otherwise, Turkey will shift to [imports of] billet.”
A second trading source was less optimistic about Turkish scrap import pricing, noting that current prices could very well be at a short-term peak before the traditional summer slowdown begins.
“The Turks have been very strategic when they come in and out of the market during their buys. They know when they are in a position where they don’t need to pay more for scrap,” he said.
There is no shortage of bulk cargoes being offered by global exporters in the deep-sea market right now, a factor which could only strengthen Turkey’s position at the negotiation table.
Taiwan’s import prices for containerised HMS-grade ferrous scrap rose by $5 per tonne this week as some buyers who are in need of material conceded to attempts by US suppliers to gain a premium.
“The US suppliers are trying to push up prices. Taiwanese buyers have been resisting, but have had to accept at least some increases if they need to buy,” a trader said.
Prices have been rising in line with the growth in the Turkish import scrap price in recent weeks.
Metal Bulletin’s price assessment for imports of USA-origin HMS 1&2 (80:20) into Taiwan was $255-265 per tonne cfr for the week ending July 14, up by $5 per tonne from $250-260 per tonne cfr last week.
Deals were said to have been done between $258 and $265 per tonne cfr Taiwan, according to local traders, with most business reported at $260-263 per tonne cfr.
At the same time, however, a source on the producers’ side said that he has made purchases at $255-257 per tonne cfr Taiwan this week.
Offers for USA-origin HMS 1&2 (80:20) were said to be between $262 and $268 per tonne cfr.
Offer prices for Japanese H2-grade bulk cargoes were heard at $275-280 per tonne cfr this week in Taiwan, according to sources.
Domestic scrap traders in Taiwan were said to be unhappy with too wide a gap between their deal prices and those for imports, and were said to be holding back from making offers until mills are ready to pay higher prices.
“For now, it is just pushing the mills to import more [volumes],” a trader said.
What is limiting import scrap demand, though, is lower production at the mills due to summer maintenance work, market participants said.
“With the rise in import scrap prices, Taiwanese mills’ production costs are getting higher,” a trader said. “So, there is an expectation of a rise in the rebar offer prices next week.”
Containerised shredded scrap import prices in India declined this week as buyers stood their ground and sellers agreeing to a discount in order to complete sales.
Metal Bulletin’s index for containerised shredded scrap imports into India was $308.89 per tonne cfr Nhava Sheva on Friday, down by $2.49 per tonne week-on-week.
Buying activity for shredded scrap has been limited over the past few weeks, with many market participants grappling with technical problems linked to India’s new goods & services tax (GST).
But Metal Bulletin heard of a handful of deals concluded this week at prices comfortably below the average offer price of $315 per tonne cfr Nhava Sheva.
One deal for 10,000 tonnes of mixed-origin material was heard at $308 per tonne cfr Nhava Sheva, while USA-origin material was heard sold at $310-312 per tonne cfr.
Other deals were heard concluded in the range of $305-308 per tonne cfr.
Aside from continuing GST issues, market activity was also constrained by a number of other factors.
“Nothing much is happening because of the rains. For the past 2-3 weeks, we have been very cautious,” one trader said. India’s monsoon season has now started and usually continues until October.
“There are no sales for finished products,” another trader said, while another source highlighted the fact that domestically produced direct reduced iron (DRI) is trading at competitive prices.
“Most of the mills are not buying scrap – local scrap and DRI are much cheaper,” one seller said.
Despite the factors weighing on the Indian import scrap markets, certain sources believed that prices could rise over the coming weeks.
One seller attributed the fall in shredded prices to a lack of market knowledge among some market participants.
“If I’m in India, I know to hold the material, [but] people who are not well-informed are not holding and are selling cheap. We expect that, by September-October, this will be a very solid market,” the seller said.
“We expect that prices will go up, so everyone is holding [material] this week,” one trader said.
Turkish domestic scrap prices inched up further, under pressure from healthy finished steel demand and the surge in imported scrap prices last week.
Cem Turken in Istanbul, Lee Allen in London and Nadia Popova in Moscow contributed to this report.