WEEKLY SCRAP WRAP: Turkish buying pushes up global scrap prices
A sharp increase in Turkish scrap import values pushed up scrap prices in the major markets during the working week from Monday July 24 to Friday July 28.
Turkey had taken a short break from the deep-sea scrap import markets and resumed buying material for September on July 26 at strongly higher prices.
Turkish steel producers returned to the deep-sea scrap market and booked eight cargoes, totalling more than 250,000 tonnes, between July 26 and July 28.
Two European cargoes broke the Turkish silence on Wednesday, raising the daily scrap indices by around $19 per tonne.
A steel mill in the Iskenderun region booked a European cargo, comprising 20,000 tonnes of HMS 1&2 (75:25), 5,000 tonnes of shredded and 15,000 tonnes of a mixture of HMS 1 and bonus.
Another steel mill in the Marmara region booked a second European cargo, comprising 25,000 tonnes of HMS 1&2 (75:25) at $311.50 per tonne, 3,000 tonnes of shredded at $321.50 per tonne and 12,000 tonnes of bonus at $326.50 per tonne cfr.
Two more deals were heard on July 27.
A steel producer in the Iskenderun region booked a Baltic Sea cargo, containing 30,000 tonnes of shredded at $324.50 per tonne cfr.
And another steel mill in the same region booked a US cargo, comprising HMS 1&2 (80:20) at $319.50 per tonne, shredded at $324.50 per tonne and bonus-grade scrap at $329.50 per tonne cfr.
Turkish mills closed the week with a further four deep-sea cargoes.
A steel mill in the Iskenderun region booked a US cargo, comprising 20,000 tonnes of HMS 1&2 (80:20) at $324 per tonne and 10,000 tonnes of shredded at $329 per tonne cfr.
The same mill also booked a Baltic Sea cargo, comprising 8,000 tonnes of HMS 1&2 (80:20) at $321 per tonne, and 8,000 tonnes of shredded and 6,000 tonnes of bonus at $331 per tonne cfr.
Another steel producer in the same region booked a 30,000-tonne Baltic Sea cargo, comprising HMS 1&2 (80:20) at $322 per tonne, bonus at $332 per tonne and rail at $337 per tonne cfr.
A steel mill in Northern Turkey booked a US cargo, comprising 20,000 tonnes of HMS 1&2 (90:10) and 15,000 tonnes of P&S at an average price of $325 per tonne cfr.
The main reason behind the rising prices was the current low scrap collection rates, sources said.
“Collectors are expecting further price increases. The yards had to raise their offers eventually,” a Turkish source said.
“Most market participants are on holiday in the EU, and that is another reason for low scrap collection [rates],” a European source said.
Turkish steelmakers resumed their September buying, picking up several cargoes at higher prices after the mills took their short break.
The demand in Turkey raised prices in the US East Coast scrap markets.
All signs point to a positive direction for US scrap prices in the near term, as Turkish demand for domestic rebar remains strong, while the US dollar is weaker against the Turkish lira compared with early July.
“It is very much a seller’s market right now,” a broker source said.
“It is the fundamentals of demand and supply, and July is a slow month for industrial scrap. I expect that the Turks may wait [but] I don’t think the exporters will accept anything lower than $315 [per tonne],” he added.
Meanwhile, US exporters on both coasts are busy loading vessels and filling previous bulk orders. However, inflows at coastal dealer yards have slowed, particularly on cut grades, which reportedly hindered the collection process.
Market chatter indicates that US East Coast exporters are reaching inland to acquire material.
In response to the recent increase in bulk scrap prices to Turkey, prices for containerised shredded scrap on the US East Coast and US Gulf Coast moved up as well. Market participants indicated that prices are $280-285 per tonne fas on the East Coast and $290-295 per tonne fas on the Gulf Coast, citing expectations of further increases.
On the US West Coast, sources said that a full cargo of shredded scrap was sold at $332 per tonne cfr to a Bangladeshi mill.
Taiwan’s import prices for containerised HMS-grade ferrous scrap have inched up over the past week, as offers to the country heard earlier at higher prices have turned into deals.
“Taiwanese rebar demand is weak due to the rainy season, so it is difficult for mills to raise their steel product prices for the home market after purchasing more expensive scrap,” a trader said.
“However, as the international scrap market has been growing, Taiwanese buyers have had no choice but to purchase at the higher prices,” he added.
Deals for USA-origin HMS 1&2 (80:20) were heard at $270-275 per tonne cfr Taiwan. There was also some business heard done by a large buyer at $265-270 per tonne cfr.
Offers of material from the USA were reported at $280-285 per tonne cfr Taiwan.
Offer prices for ferrous scrap arriving in containers in India accelerated this week amid the strength in the Turkish markets, but buyers snubbed sellers’ valuations, sources said on July 28.
Metal Bulletin’s index for containerised shredded scrap imports into India was $312.60 per tonne cfr Nhava Sheva on Friday, up by $6.50 per tonne week-on-week, but no business was concluded after the midweek rise in Turkey.
“The markets are really not reactive and are quite dull – I don’t think people are ready to pay very high prices,” one buyer said.
The Indian import scrap markets continued to be blighted by poor demand for finished steel this week, sources said.
“There are a lot of [scrap] shipments coming into India, but nobody is able to sell,” one trader said.
“In the past month, I have lost $100,000,” he said, adding that he is currently holding more than 20,000 tonnes of material.
Despite the poor market conditions this week, sources believed that the Indian market could replicate the increases seen in Turkey.
“There is going to be more strength in the scrap markets as we get into September and October, and there will be more demand from India and Pakistan,” one UK seller said.
“I guess India will catch up; it has to catch up because people need scrap to run their factories,” one Indian seller said.
The Chinese government looks likely to penalise 43 scrap importers it suspects of having committed environmental violations, the country’s Ministry of Environmental Protection said this week.
Inspection teams were set up to scrutinise companies importing scrap into the country earlier in the summer.
“[About] 60 inspection teams checked a total of 77 enterprises and found 43 [that could have committed] environmental violations,” the ministry said on July 24.
“The inspection team has put forward a proposed punishment,” the ministry added, without disclosing what the penalty would be.
China intends to place an import ban on a host of scrap products by the end of 2017.
Nadia Popova in Moscow, Lee Allen in London and Mei Ling Toh in New York contributed to this report.