WEEKLY SCRAP WRAP: Tight supply pushes up prices in most markets
Scrap prices in the world’s major markets except the United States continued to strengthen in the week from Monday January 8 to Friday January 12 amid low supplies of material.
Turkish steel mills resumed their deep-sea scrap bookings at the beginning of the week and have now booked three deep-sea cargoes from the Baltic Sea region.
Turkish steel mills booked deep-sea cargoes from the Baltic Sea region over the past week, while US suppliers were mostly out of the market due to heavy winter conditions, which was limiting scrap flows.
A steel mill in northern Turkey booked a Baltic Sea cargo, comprising HMS 1&2 (80:20) at $376 per tonne, shredded at $381 per tonne and bonus scrap at $386 per tonne cfr.
The same steel mill booked a second Baltic Sea cargo, comprising 12,000 tonnes of HMS 1&2 (80:20) at $375 per tonne, 12,000 tonnes of shredded at $380 per tonne and 4,000 tonnes of bonus at $385 per tonne cfr.
A steel mill in the Iskenderun region booked a Baltic Sea cargo, comprising 24,000 tonnes of HMS 1&2 (80:20) at $374 per tonne, 5,000 tonnes of bonus at $384 per tonne and 1,000 tonnes of rail at $389 per tonne cfr.
Baltic Sea suppliers were still in the market, sources told Metal Bulletin, taking advantage of the absence of US suppliers.
“Five or six Baltic Sea suppliers are offering HMS 1&2 (80:20) at $375 per tonne cfr, but the US is still out of the market due to heavy snow [on that country’s East Coast],” a Turkish source said.
Meanwhile, the mills in Turkey could finally start to sell rebar for exports, which is expected to support their scrap purchases, according to the sources.
Two Turkish mills sold some rebar to the US at $575-580 per tonne fob actual weight, while another mill sold a small cargo at $585 per tonne, Metal Bulletin was told.
“Southeast Asian countries are also showing interest in Turkish rebar,” a trading source said.
US bulk ferrous scrap export prices flatlined due to a lack of confirmed activity, with supply concerns limiting the amount of offers in the deep-sea market and bringing the price rally for East Coast containerized shredded scrap to a temporary halt.
No cargo sales were confirmed off either the US East or West Coast over the past seven days, but there were rumors of an alleged bulk sale off the East Coast to Egypt at $385 per tonne cfr for HMS 1&2 (80:20).
US exporters are seeking prices as high as $390 per tonne cfr on new cargo offers to Turkey, sources said.
Despite the lack of bulk trades between the US and Turkey, export prices are expected to remain firm in the near term. While strong demand from emerging markets in the Middle East and Latin America is one factor, severe winter weather is also expected to limit scrap flows - especially in the Northeastern US regions where exporters are located.
“There is a shortage of material on the coast. We recently raised scale prices but I can’t say that our flows have improved,” an East Coast processor source said. “It is really hard to gauge the effect of higher prices because of the bad weather.”
Exporters on all three US coasts – East Coast, West Coast and Gulf Coast in the south – are currently busy acquiring material to fill previous bulk orders. East Coast exporters are reaching out further for material, making quiet higher-priced deals to draw scrap from inland suppliers, sources said.
US domestic prices settled on secondary grades upward of $30 per ton in January, which gives dealers ample bargaining power to push for higher prices at the export yards.
Market participants in the Boston area have received a $5-10 per ton increase this week, but negotiations are continuing in Philadelphia and New York for dealers who had just finalized their monthly sales to the local mills.
Meanwhile, containerized shredded scrap prices on the East Coast reached a plateau this week after rising for seven consecutive weeks. Market participants indicated that prices remained at $350-360 per tonne fas this week, unchanged from a week ago.
One export source believes that containerized shredded prices might have hit a temporary ceiling at current price levels, given that there were no increases in response to higher bulk prices to Turkey.
On the West Coast, containerized HMS 1&2 (80:20) made some gains after staying flat over the year-end holidays. Prices rose to $335-340 per tonne fas, up from $325-330 per tonne fas previously.
Prices for shredded scrap imported in containers into India continued to rise this week despite a weakening in the country’s local markets for finished and semi-finished steel.
Metal Bulletin’s index for Indian imported shredded scrap rose to $380.45 per tonne cfr Nhava Sheva on January 12, up by $6.36 per tonne week-on-week.
“The scrap market is firm in all sectors, with no downside in the near term,” one US-based seller said.
“The weather is better in Europe, so the offers will be rolling in soon. We will be seeing in February that the scrap prices will rise because there is a shortage in the market,” one Indian trader said.
“The Indians thought that, because Chinese steel prices are falling, there will be some weakness in the scrap markets, [but] there will be a shortage of scrap so I don’t think that prices will come down internationally,” one Middle East trader said.
Deals for shredded scrap were heard in the range of $378-380 per tonne cfr Nhava Sheva this week, including one transaction for 2,000 tonnes of UK-origin material.
Offers for US-origin material were heard at $375-385 per tonne cfr Nhava Sheva, with bids for similar material at $370-375 per tonne cfr.
Import prices for containerized HMS in Taiwan have edged up further over the past week, though fears of a possible decline have emerged with the easing of a recent supply shortage coupled with China’s weakening ferrous markets.
Sellers raised their offer prices to $360 per tonne cfr this week, from $355-360 per tonne cfr last week, taking advantage of what some consider to be the last window of opportunity before a possible price downtrend sets in, sources said.
“Supply is getting slightly better and is not as tight as before the New Year. I am getting regular offers from sellers,” a Taiwanese buyer source said.
A source at a major scrap consumer said that it had purchased limited quantities of imported scrap at prices close to $350 per tonne cfr Taiwan, the same amount it paid last week.
Traders said there were other negotiations taking place in the spot market at $350-360 per tonne cfr Taiwan, with bids being made at $350 per tonne cfr Taiwan.
China’s weakening steel prices, seen against the strength in those for imported scrap in Taiwan, are sending mixed signals to the market, sources said.
“Given that long steel prices in China have kept falling, Taiwan’s scrap prices should also be following that trend soon. Prices this week are in a bit of flux,” a Taiwanese trader said.
But a number of traders think there will be some supply shortage of imported scrap in Taiwan amid harsh winter conditions in the US. Better margins in the bulk-shipment market could also continue to restrict the supply of containerized cargoes, they said.
Turkish domestic scrap prices increased in line with rising imported scrap values at the beginning of the week.
The majority of Turkish steel producers raised their auto bundle (DKP grade) scrap purchasing prices over the past week.
As a result, Metal Bulletin’s weekly price assessment for domestic auto bundle scrap in Turkey rose to TRY1,230-1,370 (325-362) per tonne delivered on January 8, from the previous week’s TRY1,210-1,360 per tonne.
Meanwhile, ship scrap prices also increased over the past week, with three steel mills raising their buy prices for the material to $362 per tonne delivered, while the remaining two raised their prices to $359 per tonne.
Metal Bulletin’s weekly price assessment for melting scrap from shipbreaking in the Turkish domestic market rose to $359-362 per tonne delivered on Monday, up from last week’s $345 per tonne.
Lee Allen in London, Mei Ling Toh in New York and Paul Lim in Singapore contributed to this report.