WEEKLY SCRAP WRAP: Prices rise in India, Taiwan while Turkey stays quiet
Scarce supply in global scrap markets pushed up import prices to both India and Taiwan in the working week from Monday January 1 to Friday January 5, while market activity has remained low in the bellwether Turkish market.
No deals were concluded by Turkish mills for imported bulk scrap cargoes during the week, with many suppliers still on holiday until next week.
Turkish steel mills were expected to book more scrap for February this week, but supply has remained tight and the country’s producers were not finding demand for finished steel in their export markets.
“Scrap collection is slow due to heavy winter conditions and holiday [absences]. I think the snow storms in the United States will continue to affect the market,” a Turkish source said.
Offers for US suppliers were said to be at $380 per tonne cfr Turkey this week, with Baltic Sea offers heard at $377 per tonne cfr.
“There are not many offers available in the market and we [have received] only a few offers at $380 per tonne for HMS 1&2 (80:20),” a Turkish mill source said.
Turkish mills were looking to pay closer to $365 per tonne cfr Turkey this week, a US source said.
US scrap market participants begin the new year with bullish sentiments, noting that there is no downside seen for scrap prices - export or domestic - in January.
“Turkish rebar is currently [priced] around $560 [per tonne fob]. This tells me that [HMS 1&2 (80:20)] could theoretically go to $400 [per tonne cfr] unless billet - or a black-swan event that could disrupt demand or supply - comes into play,” a broker source said. “We haven’t had such prices since 2013, and there doesn’t appear to be anything that would slow things down.”
A second broker echoed this positive outlook. “Global fundamentals are aligned and they are very strong,” he said. “Just look at what coking coal has done in the past two months. Also, the weaker dollar is a good thing for the export sector.”
Severe winter weather hit the US Northeast last week and is expected to further dry up scrap flows into coastal dealers’ yards. Market participants believe that this will have a significant effect on the supply of cut grades such as HMS 1 and plate and structural (P&S) scrap.
“Domestic [pricing] is going to follow export [prices], especially given the bad weather that we have right now. I’m seeing strength in the market, and dealers in my area don’t have a lot of scrap to ship,” a US East Coast processor said.
Escalating export prices and weather concerns have pushed US East Coast export yard buying prices up by as much as $20-30 per gross ton over the past two weeks for some market participants. Bullish expectations for January have caused the dock buying price range for HMS 1 to widen.
Prices for shredded and HMS scrap grades imported into India in containers jumped to four-year highs this week, with the country’s domestic finished steel markets enjoying a strong start to the year.
Metal Bulletin’s index for imported shredded scrap rose to $374.09 per tonne cfr Nhava Sheva on Friday January 5, up by $22.61 per tonne from the $351.48 per tonne cfr recorded on December 22.
The last time that the index was as high as Friday’s price was in October 2014.
Indian domestic steel markets have been lifted this week by strong buying activity and a 22% rise in iron ore prices from state-run producer National Mineral Development Corp (NMDC).
Rising demand from Indian steelmakers for the scarce stocks of ferrous scrap material available in the global scrap market could push market prices even higher, market sources told Metal Bulletin.
“The market is pretty good in India - it is a supplier’s market. Buyers think that if they don’t buy now, they won’t have enough [scrap] for their needs,” one seller said.
“Everyone has low [scrap] supplies because Indian steel products have been selling easily recently,” one trader said.
“Mills in India don’t have a choice whether to buy at these prices,” another seller said. “Many of the mid-size to smaller mills want to wait another week before considering getting into the market.”
Some 5,000-7,000 tonnes of shredded scrap was heard sold to a large Indian consumer at $378-380 per tonne cfr Nhava Sheva. Offers were heard at $375-385 per tonne cfr.
Deals for shredded scrap imported to the rival Pakistan market were heard at $380-382 per tonne cfr Port Qasim on Friday.
Import prices for containerized HMS-grade scrap in Taiwan regained some upward momentum this week amid tight supply and healthy demand.
Metal Bulletin’s assessment of import prices for US-origin HMS 1&2 (80:20) into Taiwan was $350-355 per tonne cfr for the week ended January 5, up by $12-15 per tonne week-on-week.
Sellers who said there was limited supply in the market raised their offers to $355-360 per tonne cfr Taiwan from $340-345 per tonne cfr previously.
“There are few spot offers because [suppliers in] the US have just returned from the year-end holidays and sellers have just started getting back to work,” a Taiwanese trader said.
“We are in a really bad wave of historic low temperatures for this time of the year, which have impeded the entire transportation, logistics and scrap-processing supply chain,” a source in the US told Metal Bulletin. As a result, supply is short, which pushes prices upward.
A key buyer source said that it had purchased limited quantities of imported scrap at close to $350 per tonne cfr Taiwan. Traders said there were other cargoes being negotiated at $350-355 per tonne cfr Taiwan.
Buyers were bidding $341-350 per tonne cfr Taiwan.
“There remains a gap between the bids and offers in the spot market, as some buyers do not think that prices [ought to be] that strong,” a second Taiwanese trader said.
Cem Turken in Bursa, Mei Ling Toh in New York and Paul Lim in Singapore contributed to this report.