WEEKLY SCRAP WRAP: Turkish mills still holding back while US market enjoys firm domestic demand
The uncertainty created by the announcement of import tariffs under Section 232 in the United States kept Turkish steel mills out of the deep-sea scrap markets during the working week from Monday March 19 to Friday March 23, although strong demand in the US domestic market kept sentiment positive.
But the poor demand for material sent Taiwanese import prices downward.
The Turkish steel producers remained out of deep-sea scrap markets for a second consecutive week, as a result of the Section 232 uncertainty.
There has been no deep-sea scrap trading since the mills in the country stepped back from the market on March 9, when the US applied a 25% duty on imports of steel products following its Section 232 investigation.
But market sentiment was not notably negative, with strong domestic demand in the US and news of a Canadian cargo sold to Brazil at firmer prices.
Market sources believed that the mills in Turkey are very active in the country’s domestic scrap market during their absence from the deep-sea markets.
“The US domestic market could move up by about $20 per tonne or more for April, after going up by $30-40 per tonne for March. So, a lot of shredded [scrap] on the US East Coast will be sold domestically. I am already hearing of domestic sales [in that region] for late April-early May shipment,” a trading source in the US said.
A Turkish source believed that the country’s mills have not stopped their scrap purchases. “I think Turkish mills did not stop buying scrap; they are buying a lot of material from the domestic market. Local scrap prices are around $370 per tonne,” he said.
“There was only one US supplier offering material in the market, and no other offers available if that supplier sells its cargo. I have already heard that a Canadian supplier sold HMS 1&2 (80:20) at $405 per tonne cfr Brazil,” he added.
But the Turkish mills were expected to book more scrap for April, sources believed.
“Turkish steel producers should book more scrap for April, but they do not want to resume purchases before getting some demand for their finished goods,” a Turkish source said.
Bulk and containerized ferrous scrap export prices on the US West Coast moved in different directions this past week. But a lack of bulk activity on the US East Coast did not prevent export yard buying prices from rising amid healthy demand.
Activity picked up on the West Coast over the past week, with two bulk cargoes confirmed to have been sold from two exporters to a Chinese electric-arc furnace steelmaker at $395 per tonne cfr for HMS 1&2 (80:20) and $406 per tonne cfr for HMS 1 and shredded scrap.
Meanwhile, prices for containerized HMS 1&2 (80:20) on the West Coast were showing some signs of stress. Market participants indicated that local container offer prices had fallen to $340-350 per tonne fas this week from $355-360 per tonne fas a week ago.
Sales to Taiwan concluded on a high note at $365-373 per tonne delivered late last week, but sources indicated that prices this week are off by $10 per tonne due to a temporary lack of rebar sales in Taiwan.
On the East Coast, meanwhile, US exporters have seen no bulk sales to Turkey since mid-February. Turkish steelmakers have been sitting out of the deep-sea market since March 9.
Deep-sea cargoes were being offered to Turkey at $375-380 per tonne cfr but Turkish mills were trying to negotiate a $10-per-tonne discount on their next deals, sources said.
But sources believe it will be difficult for US exporters to accept a price of $365-370 per tonne due to rising export yard buying prices and expectations of another potentially strong increase in domestic prices for shredded scrap and prime grades in the coastal region next month.
Export buying prices for HMS 1 in Boston and Philadelphia moved higher this week to an average of $305 and $315 per gross ton delivered, respectively, while New York-area docks held firm at $305 per ton. Whether more increases are on the horizon remains unclear due to the lack of direction in the export sector at the moment.
“The market is not as bullish as it was two weeks ago and flows are much better now than… in February,” a seller to the docks and domestic mills said. “[The exporters] are waiting to strike the next sale before making any more price movements.”
Prices for containerized shredded scrap on the East Coast remained at $358-365 per tonne fas, unchanged from a week ago. Sources said that trading activity was limited this past week due to supply tightness as well as buyers’ attempts to reduce prices.
“Some Indian brokers are trying to buy [at prices] down by $5-10 [per tonne] with the Turkish market still stalled,” an East Coast processor said. “But we are not selling or panicking because there is talk of a very strong domestic market in April.”
Import prices for containerized heavy melting scrap (HMS) in Taiwan dropped this week on poor demand from end-users.
The dip marks the end of a four-week upturn, which started on February 9 on bullish sentiment caused by US President Donald Trump’s imposition of import tariffs on steel products.
Deals have been few, however, although one major buyer was heard to have purchased 5,000-6,000 tonnes of imported scrap at $360 per tonne cfr Taiwan.
US-origin offer prices have dropped rapidly over the past few days, from $370 per tonne cfr earlier in the week to $355 per tonne cfr on March 23.
“Downstream demand for construction materials such as rebar is very bad due to the lack of new major building projects,” a Taiwanese trader said on Friday.
And an increase in the number of spot cargoes on offer has also put off buyers, sources said. Buyers are now waiting for prices to drop further in response to the increase in supplies.
Market sources said that offers were likely to continue to dip further given the sentiment in the wider Asian market, which softened considerably on Friday due to rapidly falling steel futures in China - a key barometer of steel and ferrous scrap prices in Asia.
The market for containerized ferrous scrap imports into India showed signs of softening this week amid poor scrap demand and weaker local steel prices, sources told Metal Bulletin.
Market participants shied away from buying imports at a time of uncertainty in the steel markets after Indian rebar prices dropped by 1,000 rupees ($15) per tonne week-on-week.
“We were planning to secure some quantities of scrap earlier this week but, looking at market sentiment, we will postpone our buying,” one consumer said.
“There won’t be much import scrap demand because there is good availability of local scrap,” another buyer said.
Metal Bulletin’s weekly index for containerized imports of shredded scrap into India was $395.72 per tonne cfr Nhava Sheva on March 23, down by $3.23 per tonne week-on-week compared with $398.95 per tonne cfr seven days ago.
Pakistan import shredded was sold at prices as high as $403 per tonne cfr Port Qasim earlier this week. But buying halted after a massive devaluation of the Pakistani rupee against the US dollar, sources said.
The scrap import business is also being obstructed by the Reserve Bank of India, which last week banned Indian banks from issuing letters of undertaking (LoUs) in an attempt to combat fraud, along with the fact the market participants are busy managing their accounts before the end of the financial year, sources said.
Market sources were divided in their view of whether the market will continue to soften over the next week.
“It is deadlock, and everyone is watching and waiting. If you see nothing happening for another week, sellers will start to reduce their offers,” one seller said.
“Nobody is going to offer shredded for less than $400-405 per tonne cfr,” a trader said, “and nobody needs to sell because they’re all fulfilling old contracts.”
Turkish domestic scrap prices continued to rise at the beginning of the week, in line with strong demand, because of the lull in deep-sea trading.
Metal Bulletin’s weekly price assessment for domestic auto bundle scrap (DKP grade) in Turkey on Monday was TRY1,300-1,520 ($331-388) per tonne delivered, up from last week’s TRY1,260-1,420 per tonne.
The upward movement in the assessment came after the steel mills and a major scrapyard raised their buy prices for the material by TRY55-100 per tonne over the past week.
“The weakening lira is pushing up domestic rebar prices, which push up scrap prices in the local market,” a Turkish source said.
Meanwhile, ship scrap prices in the country’s local market followed a similar trend over the past week, with three steel mills raising their buy prices to $370 per tonne delivered, while a fourth one increased its price to $372 per tonne.
Lee Allen in London, Mei Ling Toh in New York and Paul Lim in Singapore contributed to this report.