WEEKLY SCRAP WRAP: Turkish market slows with Ramadan, Taiwanese import prices up on higher offers
Turkish steel mills have slowed their deep-sea scrap purchasing as the Islamic holy month of Ramadan has started and finished steel demand has weakened, while the US export market was also sluggish – with only one deep-sea sale heard – during the working week from Monday May 29 to Friday June 2.
Meanwhile, Taiwan’s scrap import prices have gone up slightly, as tightness in the supply from the USA and a strengthening Japanese yen drove up offer prices.
The Turkish scrap import market was quiet because of Ramadan until June 1, when two deep-sea cargoes were heard at slightly lower prices compared with the cargoes booked in the previous week.
A steel mill in the Marmara region of Turkey booked a US cargo, comprising 25,000 tonnes of HMS 1&2 (80:20) at $271 per tonne, 10,000 tonnes of shredded at $276 per tonne and 5,000 tonnes of P&S at $281 per tonne cfr.
The news of the cargo sent the daily indices down on Thursday by $7-8 per tonne. However, a Baltic Sea deal was booked later in the day, causing a $4-5 per tonne recovery in the indices on June 2.
A steel producer in Northern Turkey booked the Baltic Sea cargo, comprising 15,000 tonnes of HMS 1&2 (80:20) at $271 per tonne, 12,000 tonnes of shredded and 6,000 tonnes of bonus scrap at $281 per tonne cfr.
“Prices have fallen but this was expected because of Ramadan. Prices are under pressure during the fasting period due to slow buying,” a trading source said.
“Iron ore prices are also falling and scrap prices would react to that,” another trading source said.
“No finished steel was sold for June exports and all this material will come into the domestic market, which will create over-supply. Prices have definitely started to fall,” a Turkish source said.
“A Turkish steel mill refused a Romanian cargo, which means prices are expected to weaken. But I think this is only for Ramadan,” a CIS supplier said.
The price of the bulk sale to Turkey from the US East Coast was more than $2 per tonne lower than the preceding cargo of cut grades sold to Turkey on May 18.
Trading sources were a little baffled, comparing prices in this trade to two European and Baltic Sea cargoes that changed hands late last week at $272 per tonne cfr for HMS 1&2 (80:20).
However, a dealer source on the East Coast was not very concerned by the lower export prices.
“They want to make sure they have a sale and they have to move material. I don’t think it is a horrible move even though this may put slight downward pressure on domestic prices,” this source said.
“The docks have done pretty well getting their sales off recently, and they have held their buy prices steady. Cut grades are not all that plentiful on the [US East] Coast, but I think there is material out there if the price is right,” a second dealer source said.
Traders expect the intermittent buying trend to continue and prices to remain stable for the moment, although it is unclear how long this will continue, as global fundamentals are generating mixed signals for the medium-term market outlook.
Import prices for containerised HMS-grade ferrous scrap in Taiwan have increased this week, as tight supply from the USA and a strengthening yen drove up offer prices.
Pressure had been mounting in the market after three consecutive weeks of stagnant import prices in the East Asian island, with the final push being given by an increase in offer prices from Japan due to the stronger currency.
“Because of the exchange rate, Japanese scrap has become more expensive now,” one Taiwanese trader said on Friday.
Amid the higher offer prices from Japan, some Taiwanese electric arc furnace (EAF) mills have started to accept HMS 1&2 (80:20) containers from the USA at prices above $240 per tonne cfr, even as high as $245 per tonne cfr, several sources said.
Most transactions were concluded at $242-243 per tonne cfr, some sources said.
Prices for shipments of containerised shredded scrap into India nudged down this week, with buyers staying out of the market.
Large gaps remained between buyers and sellers of HMS 1&2 (80:20), as there were last week, but another contributing factor to low market activity over the past seven days was uncertainty over a significant Indian tax reform.
The Goods & Services Tax (GST), which is expected to come into force by the first day of July, is designed to combine a host of existing taxes and should make it easier to move goods between Indian states.
“GST is a positive for the economy but, in a couple of weeks around July 1, [there] could be some uncertainties on the procedures to be followed by steel mills,” one trader said. Steelmakers would “prefer to have low stocks around then”, he added.
“Destocking of [material] at manufacturers’ plants could lead to lower demand in June,” one buyer said.
Metal Bulletin’s index for containerised shredded scrap imports in India closed at $293.02 per tonne cfr on Friday, down by $2.10 per tonne compared with $295.12 per tonne cfr Nhava Sheva seven days ago.
A larger volume of shredded material heard offered to the Indian market this week was from the USA, sources said, with EU- and UK-origin material priced higher due to the high value of the euro and high freight costs respectively.
Offer prices for UK- and USA-origin shredded scrap were heard at $293-300 per tonne cfr Nhava Sheva, while one deal for 1,500 tonnes of unknown-origin material was heard at $290 per tonne cfr.
Turkish domestic scrap prices remained mostly stable at the beginning of the week as the majority of mills in the country kept their buy prices flat.
Juan Weik in Singapore, Lee Allen in London and Mei Ling Toh in New York contributed to this report.