WEEKLY SCRAP WRAP: Turkish demand continues to push up global scrap prices
Scrap prices in the global markets continued to increase during the working week from Monday August 14 to Friday August 18, on strong demand in the major markets and tight supply.
Turkish steel mills took a short break at the beginning of the week but resumed their bookings on Thursday at comparatively higher prices.
The level of demand in the Taiwanese market and the material shortage in US and European scrapyards gave support to the firm prices over the week.
Turkish steel producers resumed their deep-sea scrap purchases on August 17 after remaining silent for a short while.
Two cargoes were heard on Thursday.
A steel mill in the Iskenderun region booked a Canadian cargo, comprising 2,000 tonnes of HMS 1&2 (80:20) at $357.50 per tonne, 1,000 tonnes of bundles at $357,50 per tonne, 13,000 tonnes of shredded at $362.50 per tonne and 14,000 tonnes of P&S at $367.50 per tonne cfr.
Another steel mill in the Izmir region booked a UK cargo, comprising 22,000 tonnes of HMS 1&2 (80:20) at $351 per tonne and busheling at $366 per tonne cfr. The tonnage of the busheling was not clear.
The lack of supply was one of the major reasons for the increasing prices, according to market sources.
“The scrap supply is very tight,” a trading source said. “Turkey booked a cargo from Australia last week and we now hear of one from Canada.”
Some market participants had concerns about the shipments as prices are increasing too fast, Metal Bulletin was told.
“We may see problems with September loadings as prices are rising very fast, and suppliers could struggle to collect material. And this could cause a problem for mills which don’t have a plan B,” a Turkish source said.
“Suppliers are expecting prices to increase further. That is why they are not aggressively offering material at the moment,” another Turkish source said.
“Turkey booked scrap from the [US] West Coast and New Zealand/Australia,” he said. “What effect will those cargoes have on the Asian markets, where we are already witnessing an increase in steel prices?”
US ferrous scrap export prices rallied on all fronts as prices rose by more than $20 per tonne on a cargo sold from the US Gulf Coast to Turkey late last week. Market participants expect prices to hold at current highs, with no threats seen in the near term.
After the sudden price surge, there was no Turkish buying activity earlier in the week, a trend which sources attributed to the lack of cargoes being offered.
“It is the weaker dollar, shorter inventory in scrap and the fact that there is less to buy from Europe,” a broker source said. “The story on [Turkish] rebar is that elevated pricing levels are strong enough to warrant new scrap cargoes, and prices for billet cargoes are not retreating.”
A second broker source said that the new export price levels have created more unknown factors in the near-term market outlook.
“People are holding out and expecting higher prices because of exports, and there’s more hype in the market now than there was a month ago. Still, demand [for finished steel] in Turkey is healthy, and prices [for rebar and scrap] are not subsiding,” he said.
“These prices are getting into nosebleed territory [because they are so high] ,” an export source said. “Everybody gets squeezed in that game and margins are usually the first to go […] but the market is good right now and it is not pure speculation [that is causing the price increase]. As long as billet prices stay higher than $500 [per tonne], the current scrap prices will hold.”
Taiwan’s prices for imports of containerised HMS-grade ferrous scrap have risen by $10 per tonne over the past week, as higher-priced deals have been heard.
The rise in the imported scrap prices for the country was driven by the increase in import prices for the raw material in Turkey, the world’s largest importer of ferrous scrap.
Taiwanese steel mills, meanwhile, were said to be accepting the imported scrap price rises and relaying them into their rebar offers, while the costs of other raw materials – namely, ferro-alloys and electrodes – have also risen.
However, those higher offers were accepted with difficulty due to the weak demand in Taiwan’s domestic market.
“The prices for rebar have risen too fast and, judging by the experience of previous years, this is normally followed by a sharp fall. So buyers are only purchasing on a hand-to-mouth basis,” one trader said.
“Rebar demand continues to be weak as there are no big construction projects,” another trader said.
One large buyer was said to have purchased USA-origin HMS 1&2 (80:20) at $295 per tonne cfr Taiwan. There were also deals for similar material from the same country heard at $296-300 per tonne cfr Taiwan.
Offer prices for shredded scrap arriving in containers in India jumped upward this week, beyond the reach of buyers in the country.
Competition from import markets where prices are higher than in India – such as Turkey, Pakistan and Bangladesh – increased offer prices to India this week to levels which were unworkable for most buyers.
“Bangladesh and Pakistan are hot right now, which is dragging up Indian prices,” one seller said.
“It is very difficult for Indian buyers because Pakistan is willing to pay $350 per tonne cfr,” one trader said.
One deal for shredded material was heard at $335 per tonne cfr Nhava Sheva this week, with several bids from buyers heard at the same price. Offers for UK- and EU-origin material were heard at $340-350 per tonne cfr, with USA-origin material heard at $330-340 per tonne cfr.
HMS 1&2 (80:20) prices increased by $10-15 per tonne this week, with low supply being a major factor in pushing up the prices.
Availability of imported ferrous scrap has become low in India in recent weeks because low collection rates in Europe during the summer holiday period have coincided with high demand for scrap in Turkey.
“The Indian ferrous scrap market is running short of inventory and most buyers are preferring local scrap because there is still gap of around [$23-31] per tonne between the landed cost of domestic and imported scrap,” one trader said.
Middle East-origin material was heard sold in the range of $308-315 per tonne cfr Nhava Sheva, with one deal closed for around 3,000 tonnes. Latin American material was sold at $300 per tonne cfr, while West African material was heard to be available at $305 per tonne cfr.
Offers for UK material were heard at prices as high as $320 per tonne cfr Nhava Sheva.
Turkish domestic scrap prices continued to increase in line with rising imported scrap costs at the beginning of the week.
The mills in the country have raised their buy prices for domestic auto bundle scrap by TRY80-130 ($23-37) per tonne over the past week.
Lee Allen in London, Nadia Popova in Moscow and Mei Ling Toh in New York contributed to this report.