WEEKLY SCRAP WRAP: Turkish demand drags global scrap prices upward
Demand from Turkish steel mills and tightening supply combined to push global scrap prices upward during the working week from Monday December 4 to Friday December 8.
Turkish steel mills booked 14 deep-sea cargoes in one week for January shipment, which totaled almost 500,000 tonnes.
Turkish mills booked five European and three Baltic Sea cargoes this week and paid a maximum of $352 per tonne cfr for HMS 1&2 (80:20).
That price was seen when a steel mill in the Izmir region booked a Baltic Sea cargo, comprising 22,500 tonnes of HMS 1&2 (80:20) at $352 per tonne and 2,500 tonnes of bonus at $362 per tonne cfr.
Meanwhile, the mills in the country booked five cargoes from the United States and one from Canada this week.
On Monday, a steel mill in the Iskenderun region booked a US cargo, comprising 21,000 tonnes of HMS 1&2 (80:20) at $343 per tonne, 6,000 tonnes of shredded at $348 per tonne and 3,000 tonnes of P&S at $353 per tonne cfr.
And on Thursday a steel mill in the Iskenderun region booked a US cargo, comprising 15,000 tonnes of shredded and 10,000 tonnes of HMS 1&2 (90:10) at an average price of $350 per tonne cfr.
The positive trend in the deep-sea scrap market was expected to continue, because supply is getting tighter with the colder winter conditions, which results in higher collection costs, sources said.
“Scrap prices usually increase in winter, but this [change] was not as strong in the past couple of years. This year, things are going better and prices are rising higher. However, market participants are still not fully confident,” a Turkish source said.
“Stock levels at US scrapyards are low and collection is weak due to the winter weather. This could be worse if snow falls,” a Turkish source said. “Turkish mills need a lot of cargoes for January but there are not many offers out there.”
Turkish steelmakers have delivered a surprise this week, booking three cargoes from the US East Coast at prices exceeding $340 per tonne.
The ferrous scrap market has wrapped up in many areas of the US, with December’s theme being a $20-per-gross-ton increase in prime grades and a $30-per-ton rise in secondary grades, but with deviations on some grades.
Import prices for containerized heavy melting-grade scrap (HMS) in Taiwan have risen for a seventh consecutive week with supply continuing to tighten.
“Offers of imported ferrous scrap remain limited, because sellers are bullish and want to hold on to cargoes to sell at higher prices in the future,” a Taiwanese trader said.
A source at a Taiwanese mill - a key buyer - said that it had purchased about 5,000 tonnes of imported scrap at $318-319 per tonne cfr Taiwan. Other market sources said there were also deals done at $318-320 per tonne cfr Taiwan, with a total of about 9,000 tonnes of material booked this week.
Bids have shot up to $318-319 per tonne cfr, and there are no signs pointing to the rate of price increases slowing down in the near term.
Winter conditions have left traders expecting a limited supply of ferrous scrap from the US in the coming weeks, as scrapyards are likely to have a harder time collecting and breaking scrap.
“Demand from electric-arc furnace mills in Taiwan is firm and supply is getting tighter. It is likely that prices will continue to trend upward,” a second Taiwanese trader said.
Prices for containerized scrap imported into India continued to rise this week on upward pressure created by purchasing activity among mills in Turkey and Pakistan, market sources told Metal Bulletin on December 8.
Metal Bulletin’s index for imported shredded scrap rose by $4.66 per tonne to $340.54 per tonne cfr Nhava Sheva on Friday, up from last week’s $335.88 per tonne cfr.
Deals were heard at $340-342 per tonne cfr Nhava Sheva, including one transaction from the UK for 500 tonnes, while offer prices rose to $350-355 per tonne cfr Nhava Sheva, which matched the prices of transactions heard for material arriving at Pakistan’s Port Qasim.
The rise in offer levels led to many consumers being priced out of the Indian import scrap markets this week.
“Shredded offers are too high for us. It is not viable, because the finished steel sector has not yet picked up after the [imposition of India’s new] goods and sales tax [GST],” one buyer said.
The GST was introduced by the Indian government in July this year, and many firms in the country’s steel industry are still suffering from its early problems.
Most market participants told Metal Bulletin that prices would at least remain stable over the coming weeks.
“The markets are quite firm, and I am bullish on prices. There are talks of markets pulling back by $5 per tonne from these levels, but I think the markets will stay firm because there is a good demand,” one seller said.
“People are optimistic, so they will keep buying,” one trader said.
Another seller cited the fact that there is not much material being offered in the market at the moment as being a sign that some sellers have become cautious.
“Nobody wants to get caught on the wrong foot - European sellers don’t want to sell what they don’t have, and short the market,” he explained.
Turkish domestic auto bundle and ship scrap prices continued to rise at the beginning of the week in line with increasing imported scrap and domestic rebar prices.
Almost all of the steel mills in the country raised their buy prices for the material by TRY40-195 ($10-50) per tonne in the previous week.
“[Scrap] prices are increasing while imported scrap values are rising too. The demand for rebar in the local market also recovered this week, and this is also supporting higher prices,” a Turkish mill source said.
Meanwhile, ship scrap prices in the country’s domestic market also went up, after the mills in Izmir raised their buy prices to $330 per tonne delivered.