WEEKLY SCRAP WRAP: Prices fall as Turkish, Taiwanese weakness damps sentiment

Global scrap prices have declined in key regions from the levels they showed a week ago, with the weakening Turkish lira damping sentiment in what is the world’s largest scrap import market.

Taiwanese import and US export prices followed those in Turkey, with prices in the two regions tumbling. And fresh trade actions announced by the United States on Friday August 10 could further destabilize the steel and scrap trade between that country and Turkey.

Turkey imports
Turkish scrap import prices fell to $319.46 per tonne on August 10 from $321.26 per tonne cfr on August 6, for material sourced from Northern Europe, according to Metal Bulletin’s daily scrap index.

At the start of the week, Turkish mills booked European cargoes with the HMS 1&2 (80:20) portion priced at $322 per tonne cfr, in the cheapest deals done at the time. By Thursday, a Baltic Sea cargo into Turkey was traded at $318 per tonne cfr for similar material.

The weakening of the lira throughout the week helped to depress market sentiment, because Turkish mills buy foreign scrap in dollars but sell local rebar in lira, market participants said.

“With the latest decline in the lira, there is no more law of gravity. Steel and scrap prices are in freefall now,” a trading source said on August 6.

The lira traded at TRY100 to $18.39 on August 10, weakening from TRY100 to $19.64 on August 6, and down heavily from TRY100 to $28.33 on August 6, 2017, according to exchange rate website Oanda.com.

On August 6, US President Donald Trump announced a review of Turkey’s duty-free access to the US market, on a swathe of products. On August 10, he used social media to announce that he had authorized the doubling of US steel and aluminum tariffs against Turkey, to 50% and 20% from 25% and 10% respectively.

Turkey ships significant amounts of steel to the US, primarily rebar and hot-rolled coil (HRC), so this latest escalation of tariffs could decrease Turkey’s scrap consumption, if the country’s exports to the US fall as a result.

Demand for Turkish rebar exports softened throughout the week, even before the August 10 announcement. One Turkish mill source predicted on August 6 that scrap prices could soon fall to $295-$300 per tonne cfr for HMS 1&2 (80:20) in these market conditions.

US exports
US East Coast export prices also dropped week-on-week, after a US exporter sold 35,000 tonnes of HMS 1&2 (80:20) at $328 per tonne cfr, in a deal confirmed on August 6.

No shredded scrap was on that cargo, however, which left the US export shredded scrap index flat at $325 per tonne fob New York.

On the US West Coast, prices stayed flat week-on-week. A cargo sold to South Korea after the weekly US index closed indicated that prices were stable, with HMS 1&2 (80:20) inching down by $1 per tonne from the latest cargo sold around eight days earlier.

Shredded scrap on that most recent US cargo into South Korea, on August 8, was traded at about $353 per tonne cfr, one market participant later confirmed.

US export prices into Turkey are “not looking positive” for sales in the coming weeks, one US East Coast exporter said on August 7.

Taiwan imports
In Taiwan, too, US scrap import prices fell week-on-week, but only modestly, dropping by $5 per tonne to $320-$325 per tonne cfr for US-origin containerized HMS 1&2 (80:20).

US scrap was offered at $325 per tonne cfr Taiwan this week, down by $5 per tonne from $330 per tonne cfr Taiwan last week.

US exporters offered containerized scrap at $325 per tonne cfr, but deals were struck at $320-$325 per tonne, with most deals done about $323 per tonne, according to one Taiwanese trader.

Demand remained slow because Taiwanese mills had sufficient scrap inventories, so scrap purchases were done on a hand-to-mouth basis in the week that ended on August 10.

Lower operating rates at Taiwanese mills also meant that those mills were “not in any urgent need” of raw materials, a second Taiwanese trader said.

US scrap suppliers described Taiwanese prices as low and were not eager to sell into the country.

India imports
Prices for containerized shredded scrap imported into India have decreased in deals reported over the past week, sources told Metal Bulletin on Friday August 10.

This was driven by slow demand in the market and the decline of international scrap prices, the sources added.

Metal Bulletin’s weekly index for containerized imports of shredded scrap into India decreased to $355.54 per tonne cfr Nhava Sheva on Friday, from $357.56 per tonne cfr Nhava Sheva last week.

Deals and offers of material from the EU and the UK were heard at $355-360 per tonne cfr Nhava Sheva.

“Demand is not good because of the monsoon season, with mills struggling to sell finished steel products. This has had a negative effect on scrap prices,” a trader said.

“Prices of [domestic] scrap in India are soft. They continue to be cheaper than imports,” a second source said.

Turkey domestic
The weaker lira also affected Turkish domestic scrap prices, even at the start of the week. The price of Turkish domestic shipbreaking scrap fell by $2-5 per tonne in the Izmir region on August 6, compared with the previous week, partly because finished steel demand was also modest.

But Turkish auto bundle prices held up week-on-week, with Metal Bulletin’s latest assessment on August 6 at TRY1,500-1,680 ($276-309) per tonne delivered. That price range widened downward slightly from TRY1,510-1,680 per tonne in the preceding week.

“The weak lira is keeping buyers out of the domestic rebar market,” one Turkish source said early in the week, “because the mills have had to increase their local rebar prices on a lira basis, and are showing less interest in domestic scrap.”

Maria Tanatar in Dnepr, Paul Lim in Singapore and Cem Turken in Mugla contributed to this report.

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