WEEKLY SCRAP WRAP: Global scrap prices stabilise on weaker demand
Scrap prices in the global market have mostly been stable during the working week from Monday August 21 to Friday August 25, as the Turkish market approached a holiday period and other major markets were showing weak demand.
Turkish steel mills slowed down their bookings in the deep-sea markets at the end of last week and no fresh transactions have been heard since then.
Turkish steel producers went quiet in the deep-sea markets at the end of last week after booking a number of cargoes at increasing prices, and started this week with new negotiations.
There were seven or eight deep-sea cargoes available in the market, and maybe more, according to sources. The price for HMS 1&2 (80:20) was expected to fall to $365 per tonne cfr in the next few transactions.
A US supplier was heard offering a cargo of HMS 1&2 (90:10) and shredded at $370 per tonne cfr on August 21, but there were still no takers for the cargo by the end of the week.
The steel mills were expected to book a few more cargoes before the holiday period but no significant deals have been heard since the end of last week.
The Turkish market will be closed next week for both for the national Victory Day and the religious Eid al-Adha holidays, and no trade activity is expected.
US ferrous scrap export prices to Turkey remained stable as Turkish mills and exporters continued negotiating deals early this week, but the temporary market cool-off failed to shake the bullish sentiment prevalent among market participants.
No bulk sales have been made from the USA to Turkey since August 9, when a US Gulf Coast cargo was booked by a Turkish mill at $353 per tonne cfr for HMS 1&2 (80:20). The latest US East Coast and West Coast cargo sales to Turkey concluded at $331 per tonne cfr and $330 per tonne cfr, respectively, for HMS 1&2 (80:20).
“Because Chinese futures and [London Metal Exchange] futures fell, buyers do not seem very keen to commit [to cargo bookings], and suppliers seem reluctant to sell at lower bid prices. Scrap collection is low, too. It is a tough [situation] to call right now,” a trader source said.
It is anyone’s guess when the next sale will occur and at what price, because Turkey will be on national holiday next week.
Sources were split on the near-term outlook for global scrap prices, with some on the buyers’ side believing that the rally may come to an end soon, while sellers remained positive despite the export market to Turkey cooling off.
When asked if export prices to Turkey have reached a ceiling, a second trader source said that he believed there was more upside to be had. “I still think we will see more than $360 [per tonne cfr on an HMS 1&2 (80:20) basis] soon,” he said.
“It is a seller’s market all day long on the bulk side. The bulk [cargo] terminals [on all US coasts] are loading vessels, and a lot of material is leaving the marketplace, not only to Turkey but to other countries as well. If I were a seller, I’d sit back and be in no rush to sell,” the broker source said.
Taiwan’s prices for imports of containerised HMS-grade ferrous scrap have remained stable over the past week, as deals, bids and offers have all been heard at values similar to those of last week.
One source said of the market dynamics: “This week has been quiet in Taiwan’s imported scrap market … It looks like the market has stabilised.”
Domestic scrap is being preferred over imports in Taiwan at the moment, as its availability has increased compared with previous weeks, while prices are lower for local mills than import prices, market participants said.
Meanwhile, demand for rebar in the country’s domestic market has continued to be sluggish due to the lack of construction activity, sources said.
To tackle that, some Taiwanese steelmakers were said to be exporting both billet and rebar.
Deals for USA-origin HMS 1&2 (80:20) were heard done at $295-300 per tonne cfr Taiwan this week.
Offers of similar material from the same origin were reported at $310-315 per tonne cfr Taiwan. And one contact heard an offer as high as $320 per tonne cfr.
Prices for shredded scrap imported into India in containers inched up by $0.08 per tonne this week, with buyers staying out of the market because prices were too high.
Metal Bulletin’s index for containerised shredded scrap imports into India rose to $338.17 per tonne cfr Nhava Sheva on August 25, compared with $338.09 per tonne cfr last week.
“Buyers don’t want to take positions, but supply is tight,” one seller said.
Despite a lack of buying activity, the Indian import market was held firm by steady trading in neighbouring Pakistan.
“International prices have gone up without India having any effect for some time now,” one seller said, adding that Pakistani buyers were able to pay $346-347 per tonne cfr for shredded material this week.
Low finished steel demand and heavy rains reduced prices for Indian domestic direct reduced iron (DRI) and domestic billet by around Rs1,000 ($16), but market participants said that they believed the shredded prices would hold firm.
“Availability is very tight at the moment and Turkey is covered until October shipments, so I don’t think the price will go down before January,” one buyer said.
“I expect prices to stay [flat] into next week as everyone waits to see how domestic markets globally react to the uptick we have seen in the export markets over the past 30-plus days,” one US seller said.
Turkish domestic scrap prices remained strong at the beginning of the week as the costs of imported scrap in the country were also rising until the end of last week.