WEEKLY SCRAP WRAP: Global scrap prices fall on Turkey economic uncertainty
Global ferrous scrap prices continued to soften during the week ended Friday June 1, with economic uncertainty in Turkey exerting downward pressure on spot trading values.
The imposition by the United States of Section 232 import tariffs at 25% on steel from Canada, Mexico and the EU also damped market sentiment.
Buyers in other parts of the world waited for better prices, causing negotiation activity to drop. US sellers of bulk scrap cargoes lowered their offers, causing buyers in Taiwan to bid lower.
Turkish steel mills continued their transactions in the deep-sea scrap markets for June deliveries, with prices going down slightly and a further decrease expected, sources said on May 31.
Market participants expected prices to continue to fall because of weak finished steel demand in Turkey’s export and domestic markets.
Those who were at the Bureau of International Recycling (BIR) international conference this week in Barcelona, Spain, were worried by the uncertainty in Turkey created by the Section 232 tariffs and weak demand, which depressed prices.
Lower capacity utilization in Turkey and weak demand for rebar in Turkey were also expected to lead Turkish mills to cut production, although sentiment brightened on the news of the US tariffs affecting Europe and potentially levelling the international markets.
A steel producer in the Marmara region booked a European cargo, comprising 26,500 tonnes of HMS 1&2 (80:20), 10,000 tonnes of shredded and 10,000 tonnes of bonus at an average price of $336 per tonne cfr late on May 29.
A steel mill in the Izmir region booked a UK cargo, comprising 21,000 tonnes of HMS 1&2 (80:20) at $331.50 per tonne cfr, also late on May 29.
Meanwhile, news of another European cargo from last week came to light on May 30. A steel producer in the Izmir region booked a European cargo on May 25, comprising 18,000 tonnes of HMS 1&2 (75:25), 3,000 tonnes of shredded and 4,000 tonnes of bonus sold at an average price of $335 per tonne cfr.
Prices for Baltic Sea-origin material have been falling, sources said.
A steel mill in the Iskenderun region booked a Baltic Sea cargo on Tuesday, comprising 28,000 tonnes of HMS 1&2 (80:20) at $333 per tonne, a minimum of 4,000 tonnes of bonus at $343 per tonne, and a minimum of 1,000 tonnes of rails at $348 per tonne cfr.
This compared with previous Baltic Sea cargoes, which were sold at $338 per tonne cfr for HMS 1&2 (80:20) late last week and $345 per tonne earlier last week.
Mills were trying to get lower prices due to sluggish finished steel demand in Turkey’s domestic market, Metal Bulletin was told.
US ferrous scrap export prices lost ground this week, with bulk export pricing on the country’s West Coast falling in two cargo sales to Asia, and containerized scrap facing more downward pressure on both the East and West Coasts.
The first of two cargoes sold by West Coast exporters to Asian mills during the past seven days was for a full cargo of shredded scrap, booked by a Bangladeshi buyer at $387 per tonne cfr. This was up by $7 per tonne from the preceding cargo of similar composition, sold to India two weeks ago at $380 per tonne cfr.
Meanwhile, a second cargo containing 40,000 tonnes of HMS 1 was sold to a South Korean producer at $362.50 per tonne cfr. This deal was done at $10.50 per tonne lower than the preceding cargo booked by a Vietnamese mill at $373 per tonne cfr.
South Korea is still actively buying in the bulk market, a trader source said, noting that two South Korean steelmakers booked A3-grade scrap from Russia at $355 per tonne cfr late last week.
Meanwhile, sales of containerized HMS 1&2 (80:20) on the West Coast were slower to finalize, with traders attempting to push prices down, one seller said. But deals were expected to be done at slightly lower prices.
On the US East Coast, the bulk export market was still in a lull as exporters in the region continued to resist the low prices seen in recent European and Baltic Sea trades to Turkey.
While US sellers passed on them, the latest transactions to Turkey contained mainly cut grades and very limited amounts of shredded scrap. This hinted that the tightness in shredded material persisted in the bulk export market.
Sales to Turkey concluded early this week at $331-333 per tonne cfr for HMS 1&2 (80:20) and $341-343 per tonne cfr for bonus-grade scrap.
And a 46,500-tonne European cargo changed hands at $336 per tonne cfr on May 29. The cargo contained 10,000 tonnes of shredded scrap that sold at $338 per tonne cfr, according to American Metal Market’s calculations.
With exporters making the first move to lower buying prices just ahead of the domestic US scrap price settlement, market participants in the coastal region believed that a similar reduction might be in prospect for obsolete scrap grades in June.
American Metal Market’s weekly US West Coast ferrous scrap index for HMS-grade scrap was $338.14 per tonne fob Los Angeles on May 30, down by 1.3% from $342.50 per tonne previously.
East Coast ferrous scrap export indices for HMS and shredded scrap were unchanged at $327.75 per tonne fob New York and $333.75 per tonne fob New York respectively.
Import prices for containerized HMS-grade scrap in Taiwan remained on a downtrend this week on poor end-user demand.
Metal Bulletin’s assessment of import prices for US-origin HMS 1&2 (80:20) sold into Taiwan was $335-340 per tonne cfr for the week ended June 1, down by $5 per tonne from a week earlier.
US-origin scrap was offered at $345 per tonne cfr Taiwan in the early part of the week, before dropping to $340 per tonne cfr Taiwan on Friday.
There were deals heard done at $335 per tonne cfr Taiwan, with buyers and sellers mostly negotiating within the $335-340-per-tonne range.
A major buyer purchased 1,000-2,000 tonnes US-origin scrap at “close to $335 per tonne cfr Taiwan,” according to a source with knowledge of the transaction.
Bids for containerized cargoes of US scrap were heard at $335 per tonne cfr Taiwan.
Japan-origin cargoes of HMS 1&2 (50:50) were offered at $350 per tonne cfr Taiwan, down by $5 per tonne compared with last week. Buyers continued to bid for such cargoes at $348 per tonne cfr Taiwan.
The bearish sentiment in the market was expected to persist, with Taiwan heading into the summer season soon. Electric-arc furnace mills are likely to experience power shortages once the government starts to divert electricity from industries to homes instead. This is because household electricity consumption peaks during the hot summer months.
Weak demand from regional markets such as South Korea also resulted in a higher availability of ferrous scrap in Taiwan.
The current Islamic holy month of Ramadan also resulted in weak demand for scrap in Turkey, causing US suppliers to accept lower offers while they sought alternative outlets in Asia.
Prices for containerized shredded scrap imports into India dipped this week after deals were done at lower prices with the market remaining weak, market sources told Metal Bulletin on June 1.
Metal Bulletin’s weekly index for containerized imports of shredded scrap into India was $374.03 per tonne cfr Nhava Sheva on June 1. This was down by $8.87 per tonne, from $382.90 per tonne cfr on May 25.
Several deals for UK-origin material were done at $375 and $377 per tonne cfr Nhava Shava but material was available in the market on offers as low as $370 per tonne with the same delivery terms.
The continuing fall in the Turkish scrap price this week kept sentiment for the Indian market negative, as did the imminent monsoon season in India. This is also likely to bring prices down, market participants told Metal Bulletin.
Metal Bulletin’s daily index for Northern European HMS 1&2 (80:20) material imported into Turkey was $330.42 per tonne cfr Turkey on June 1, after dipping to its lowest price this year at $325.72 per tonne cfr on May 29.
“The market is slipping. Turkey was out of the market for so long, plus India is getting its monsoon season soon, so the market will be very slow. We are selling now and waiting - selling while the price is falling,” a second seller said.
“There will be a $10-15 per tonne drop [in the price of scrap] next week, because market sentiment is down. The monsoon season is starting soon so, any time in the next two or three weeks, prices will come down. Construction activity will [also] slow down,” a third seller said.
“I think prices will stabilize in Turkey,” a trader added. “We are watching the market[ and it] will fall by another $10-15 per tonne, but it’s good in terms of demand. The monsoon season means that production will be affected.”
Turkish domestic auto bundle scrap prices pushed up this week, while ship scrap prices fell due to the weakness of the Turkish lira compared with the US dollar, sources told Metal Bulletin on May 28.
Turkish domestic auto bundle scrap prices rose, with steel mills in Turkey raising their buying prices for auto bundle scrap by TRY15-110 ($3-23) per tonne over the previous week.
Metal Bulletin’s weekly price assessment for domestic auto bundle scrap (DKP grade) in Turkey was TRY1,380-1,580 per tonne delivered on May 28, widening upward from TRY1,380-1,560 per tonne.
Cem Turken in Mugla, Carrie Bone in London and Mei Ling Toh in New York contributed to this report.