WEEKLY SCRAP WRAP: Prices expected to stay firm on strong Turkish demand
Global ferrous scrap prices are expected to remain firm over the next few weeks, as Turkish mills continued their buying spree during the working week from Monday July 31 to Friday August 4.
Turkey led the price increases, with prices also moving upward in India, the USA, Russia and Taiwan.
Turkish mills bought ten cargoes this week, with Metal Bulletin’s daily scrap index for Northern Europe-origin HMS 1&2 (80:20) scrap exported to Turkey rising by $6.56 per tonne week-on-week.
USA-origin prices increased by $6.24 per tonne week-on-week.
After a day’s silence on Monday, prices jumped on August 1 after four deep-sea cargoes changed hands on the day.
One Turkish producer in the Iskenderun region booked a Baltic Sea cargo, comprising 15,500-16,000 tonnes of HMS 1&2 (80:20) at $326.50 per tonne, 7,500-8,000 tonnes of shredded at $331.50 per tonne, 5,000-5,500 tonnes of HMS 1&2 (90:10) at $331.50 per tonne, and 2,500-3,000 tonnes of bonus at $336.50 per tonne cfr.
The same mill also booked a US cargo, comprising 15,000-18,000 tonnes of HMS 1&2 (80:20) at $327 per tonne, 20,000-22,000 tonnes of shredded at $334 per tonne, and 2,000-5,000 tonnes of bonus at $337 per tonne cfr.
The other cargoes booked on Tuesday were both from the Baltic Sea, at $324 per tonne for HMS 1&2 (80:20) and $334 per tonne cfr for bonus material. The tonnages were not known at the time of publication.
On Wednesday, one steel mill in the Marmara region booked a Baltic Sea cargo comprising HMS 1&2 (80:20) at $329 per tonne, shredded at $334 per tonne and bonus at $339 per tonne cfr. These tonnages were also not known at the time of publication.
Another steel mill in the same region booked a European cargo, comprising 20,000 tonnes of HMS 1&2 (75:25), 5,000 tonnes of shredded and 10,000 tonnes of a mixture of HMS 1 and P&S, all at an average price of $328 per tonne cfr.
The same mill booked a US East Coast cargo, comprising 20,000-25,000 tonnes of shredded at $335 per tonne and 15,000-20,000 tonnes of HMS 1&2 (80:20) at $329 per tonne cfr, and the same mill bought a US West Coast, full-shredded cargo for $335 per tonne cfr.
On Friday, two further USA-origin cargoes were booked, with prices making a slight correction.
A steel mill in the Marmara region booked a US East Coast cargo, comprising 6,000 tonnes of HMS 1&2 (80:20) at $330 per tonne, 18,000 tonnes of shredded at $335 per tonne and 1,000 tonnes of bonus at $340 per tonne cfr.
Another steel mill in the Izmir region booked a US West Coast cargo, comprising 18,000 tonnes of HMS 1&2 (80:20) at $330 per tonne, 18,000 tonnes of shredded at $335 per tonne and 6,000 tonnes of bonus at $340 per tonne cfr.
Market participants generally expected prices to continue to rise, with the market being supported by good demand and strong selling activity in finished steel in the country, Metal Bulletin was told.
“The [steel and scrap] markets seem generally strong, with firm demand. It looks like prices will continue to climb unless China does something weird,” a Turkish source said.
“Turkish mills will book more scrap at [around] $330 per tonne, as they are selling finished steel for export and nobody wants prices to go down,” a second Turkish source said.
“The whole market will keep strengthening. There might be a break at $330 per tonne [for HMS 1&2 (80:20)] but then it will continue to rise to $340 per tonne, as the billet and rebar markets are firm too,” a third Turkish source said.
US ferrous scrap exporters expect Turkish steelmakers to speed up their buying, with more than 550,000 tonnes set to leave the USA by the end of September.
“With the weaker dollar, you’re going to see some stronger export pricing as our scrap becomes more attractive to international buyers,” an export source said.
“If [international] mills are enjoying high finished steel prices, they are really not going to care how much they pay for scrap as long as they get it,” he added.
Trading sources expected Turkish scrap import prices to rise, based on the country’s domestic rebar demand, the appreciation of the Turkish lira against the US dollar, and heftier billet prices out of the CIS. But the speed and extent of the increase still took many market participants by surprise.
“Prices went up higher and faster than [we all expected], but the Turks still need at least another 15-20 cargoes for September delivery,” a trading source said.
“Rebar margins are good, and [the Turkish mills will be] hoping that [the market will] be as good into October. If they can sell rebar at $500 [per tonne], why not buy scrap for $330 [per tonne]?” he added.
US exporters so far have sold 16 cargoes totalling about 560,000 tonnes of scrap for August and September deliveries to Turkey, with 245,000 tonnes set to head offshore this month and 315,000 tonnes to be shipped out next month.
Metal Bulletin sister title AMM’s weekly US East Coast ferrous scrap export index for HMS-grade scrap rose by 5.60% to $307.26 per tonne fob New York on August 2, up from $291 per tonne.
Steel producers in India this week returned to the market to book several thousand tonnes of containerised shredded scrap for import, as markets improved following weeks of deadlock.
“Vessels booked two months ago have now arrived, so people are coming back into the market for material in bulk or containers,” one seller said.
One deal for 12,000 tonnes of shredded scrap was heard at $318 per tonne cfr Nhava Sheva, while 1,000 tonnes of UK-origin material was heard sold at $315 per tonne cfr.
EU-origin material was transacted in the range of $315-318 per tonne cfr, while offers for UK-origin material pushed up to $330-350 per tonne cfr Nhava Sheva.
Despite this week’s increase, Indian prices still remain far below the price level that market participants believe they should achieve.
“Indian mills know they have to increase prices in order to buy scrap but […] they are reluctant to increase prices as they are getting tonnages locally,” one seller said.
For more deals to be reached, buyers will have to keep raising their bid prices, one seller insisted.
“It won’t end with compromise, it will end with buyers having to raise prices. There is a lot less scrap available than [buyers] think,” he said. “Bulk sellers are taking material that would normally go to containers.”
Taiwan’s import prices for containerised HMS-grade ferrous scrap increased by $5-10 per tonne over the past week, following the continued upward trend in the global scrap markets.
However, the rises were accepted by local buyers only with some difficulty.
“Taiwanese mills are only importing scrap on a hand-to-mouth basis. The higher scrap costs get reflected in domestic rebar prices slowly, as demand is weak,” one trader said.
“Some Taiwanese mills opt for billet exports as it is more difficult to sell rebar at home,” another trader said.
“The demand for long steel in Taiwan is low as it is difficult to deliver in the rainy season, which is now under way,” a buyer source said.
Deals for USA-origin HMS 1&2 (80:20) were mostly heard between $280 and $283 per tonne cfr Taiwan, while one large mill was heard to have purchased similar material at $270-275 per tonne cfr Taiwan.
Turkish domestic scrap prices continued to increase in line with strengthening imported scrap values over the past week, sources told Metal Bulletin.
Cem Turken in Bursa, Nadia Popova in Moscow and Mei Ling Toh in New York contributed to this report.