WEEKLY SCRAP WRAP: Rally in global prices continues
Scrap prices in the global markets have continued to increase his week, amid strong demand for material in the major importing countries and upward momentum in the US export markets.
Turkish steel mills continued to book more-deep sea scrap for April at escalating prices, with the country still enjoying strong demand for its finished steel products.
Meanwhile, Taiwan import scrap prices also rose further on expectations that the United States’ Section 232 steel import tariffs will result in lower supplies of the steelmaking raw material.
Turkish steel mills accelerated their deep-sea scrap purchases late last week, although the deals were mostly heard in the market early this week.
Following the news of the US Section 232 report into imports at the end of the week, Turkish steel producers continued to book deep-sea scrap for April and paid even higher prices.
A steel mill in the Iskenderun region booked a Canadian cargo, comprising 30,000 tonnes of HMS 1&2 (90:10), 10,000 tonnes of shredded and 10,000 tonnes of plate and structural scrap (P&S) at an average price of $372 per tonne cfr late on February 28.
A steel mill in the Iskenderun region booked a European cargo, comprising 15,000 tonnes of HMS 1&2 (75:25) at $360 per tonne, 5,000 tonnes of shredded at $372 per tonne and 10,000 tonnes of bonus at $377 per tonne cfr on March 1.
Market participants expected scrap prices to remain firm because of the demand from Turkish steel producers, which is supported by strong rebar sales in both the domestic and export markets.
“I hear that a number of mills are looking for material for April now. I think we will continue to see price increases,” a Turkish source said.
“[Turkish mills’] rebar sales are very good at the moment. They are buying scrap because they can sell finished goods,” a second Turkish source said.
“I have heard of many [rebar] sales to the US, Canada, the UK, Ireland and Germany at $595-600 per tonne fob [on an] actual weight basis,” he added.
The US ferrous scrap export market is showing upward momentum despite an absence of bulk deals to Turkey while containerized scrap and dock buying prices continue to improve.
Multiple export sources are maintaining a bullish outlook, noting that export demand for US scrap is strong at the moment. Additionally, the US dollar’s loss in value against the Turkish lira and other global currencies is likely to be a boon for US scrap suppliers and exporters.
“If the US dollar continues to lose value, not only will it become harder for US mills to buy scrap out of Canada but it will also encourage Turkey and other countries to buy more out of the US,” one US broker source said.
US East Coast exporters are reacting slowly to the stronger export prices, implementing modest price increases at the docks.
The average price for HMS 1 delivered to export yards in Boston and New York rose by $10 per ton to $290 and $305 per ton respectively on February 28. Prices for the same scrap grade at docks in the Philadelphia area were steady at $300 per ton.
“The exporters have been very strict about taking prices up but I know they want scrap. We have been holding back a little on our deliveries but they know that they eventually have to push numbers up,” a seller to the docks said, noting that deals for large volumes were still being made at attractive prices.
Meanwhile, the containerized shredded scrap market on the US East Coast was still rising in response to stronger bulk scrap prices from Turkey. Market participants indicated that prices increased to $350-358 per tonne fas this week from $340-350 per tonne fas last week.
“There seems to be some more upward momentum [for container] prices. Demand looks pretty good this week – I would say mostly out of India, but also some to Indonesia,” an export source said.
On the US West Coast, prices for containerized HMS 1&2 (80:20) were also showing strength, making swift gains now that Asian buyers have returned from the lunar new year holiday. Market participants said that prices were $325-335 per tonne fas this week, up from $295-305 per tonne fas two weeks ago.
Import prices for containerized HMS in Taiwan increased further this week on expectations that the Section 232 steel import tariffs will result in lower supply of the steelmaking raw material.
There was also some tightness in supply in the spot market because traders and US suppliers withheld cargoes in anticipation of higher prices in the coming weeks.
Deals were heard concluded at $345-350 per tonne cfr Taiwan during the week. A major buyer was heard to have purchased 4,000-5,000 tonnes of imported scrap at close to $350 per tonne cfr Taiwan.
There were also other grades of ferrous scrap, such as HMS 1, sold into Taiwan at those prices, after normalization for premiums.
US-origin offers climbed quickly throughout the week from $338 per tonne cfr on Tuesday to $355 per tonne cfr on Friday.
This rapid increase was due to suppliers holding out for higher prices, riding on bullish sentiment associated with recommendations made following the Section 232 probe in the US on whether steel and aluminium imports posed a threat to the country’s national security.
“Many US recyclers have a bullish outlook for the coming weeks and are confidently holding out for higher prices,” a Taiwanese trader said.
“There could be some effect on the US domestic markets. However, what is important is whether there is any pick-up in demand from US [electric-arc furnace] mills for domestic ferrous scrap,” a second Taiwanese trader said on Friday.
He pointed out that the Asian markets could still be more lucrative for US recyclers once logistics costs are taken into account.
Prices for containerized imports of shredded scrap in India are expected to continue to rise over the coming week.
Indian mills have prospered in the export markets for finished steel so far this year, with both demand and prices for ferrous scrap in the country increasing.
“There is quite strong demand, but you also [see] scrap availability is tight,” one seller said.
“My feeling is that, internationally and in India, markets are poised to go up by $10-15 per tonne,” one Indian trader said.
“The Indian market seems pretty firm and demand is great. I believe the trend will stay for a while,” another seller said.
Sales of shredded material from the UK were heard at $385-395 per tonne cfr Nhava Sheva this week, with offers as high as $398 per tonne cfr by the end of the week.
Transactions were heard for similar material as high as $396 per tonne cfr in Pakistan, with offers at $398-400 per tonne cfr.
Despite the rising prices, sources said that Indian market activity damped toward the end of the week due to the Hindu Holi festival of colors.
Meanwhile, deals for Middle East-origin HMS 1&2 (80:20) were heard at $365-373 per tonne cfr Nhava Sheva this week, while West African material was said to be available at $350-360 per tonne cfr.
Buying was aided by a continued rise in Indian domestic steel markets this week.
“Indian local market prices dropped unexpectedly last week, which put doubt in the minds of buyers, but they picked up again,” the trader said.
Supply tightness in Indian steel billet has also been drawing more demand toward ferrous scrap this week, according to the trader.
“Lots of secondary raw materials such as billet are being exported out of India at the moment, and if [billet] is not available cheaply, scrap becomes more competitive,” he said.
Turkish domestic scrap prices remained largely stable at the beginning of the week, because most of the steel producers in the country kept their purchasing prices unchanged.
Only a few steel mills increased their buy prices, while a major scrapyard cut its price the week before.
Long and flat steelmaker Çolakoglu increased its buy price for auto bundle scrap to TRY1,380 per tonne, while alloy steel producer Asil Çelik raised its price to TRY1,400 per tonne delivered.
However, scrapyard Kiliçlar Hurda reduced its buy price to TRY1,230 per tonne delivered.
In the meantime, domestic ship scrap prices remained stable this week.
Lee Allen in London, Mei Ling Toh in New York and Paul Lim in Singapore contributed to this report.