WEEKLY SCRAP WRAP: Turkish scrap prices crash, other markets set to follow
Turkish scrap import prices have crashed this week, in line with market oversupply and weak demand from the country’s steel mills, while other market prices were expected to follow.
USA export prices also went down with the fall in Turkish buying values in the latter part of the week, while Taiwanese and Indian import prices were comparatively stable.
The Turkish import prices went down sharply at the end of the week with news of US and Canadian deals, while market participants were expecting prices to weaken even further due to oversupply.
A steel producer in the Marmara region booked a Canadian cargo, comprising 35,000 tonnes of shredded, 10,000 tonnes of HMS 1&2 (90:10) and 5,000 tonnes of P&S at an average price of $330 per tonne cfr on Friday September 22, which lowered the indices by $15.75-16.60 per tonne.
The daily indices had already seen falls of $7.71-8.01 per tonne on Thursday, when news of a US deal came to light.
A Turkish steel mill in Northern Turkey booked a 27,000-tonne cargo from a Texas mill, comprising HMS 1&2 (90:10) at $347 per tonne cfr, shredded at $350 per tonne cfr and P&S at $355 per tonne cfr.
Market participants generally blamed the current oversupply for the falling prices, Metal Bulletin was told.
“The suppliers started to offer cargoes for November, in addition to the October cargoes. There are more than 25 cargoes available out there, which creates an oversupply,” a Turkish mill source said.
“This is because the mills booked too many cargoes in August-September. Turkey generally books 32-33 cargoes a month but 54 cargoes were sold in August, which is not much different from September,” he said.
“Mills are able to wait for lower prices [when they have] strong stock levels, forcing suppliers to reduce their prices,” he added.
“The market is currently at $325-330 per tonne,” another source added, “but we will probably see $315-325 per tonne next week.”
The US bulk ferrous scrap export market has been dealt a harsh blow, with the latest sale seeing the price of HMS-grade scrap dip below $330 per tonne.
Turkey was expected to exit the market to reassess its buying strategy and to remain on the market sidelines until the International Rebar Exporters & Producers Assn (Irepas) conference on September 24-26. But the country unexpectedly returned to the US market on September 20 to buy a single cargo.
The news of the Canadian deal at the end of the week sent the prices further downward.
Meanwhile, the US East and West Coast markets were quiet, with dock prices on both coasts unchanged over the past week.
Taiwan’s prices for imports of containerised HMS-grade ferrous scrap have gone down slightly over the past week on lower deals heard, while domestic scrap was still preferred and local rebar demand has continued to be weak.
Deals for USA-origin HMS 1&2 (80:20) were mainly heard at $285 per tonne cfr Taiwan, down from $285-293 per tonne cfr last week.
Offers of similar material from the USA were heard at $290-295 per tonne cfr Taiwan, but bids were heard at $280-285 per tonne cfr.
“Some US suppliers think the Taiwanese bids are too low, so the volumes offered to Taiwan are not very high, as they prefer [to deal with] other Asian countries,” a source at a Taiwanese steel mill said.
“I think the bids will go down further yet,” a local trader said.
Domestic scrap has continued to be more attractive to local mills than imports.
“Domestic scrap prices are unchanged compared with the previous week, so they are still better for us than exports,” the Taiwanese mill source said. “We used to purchase just half of the total scrap volumes we need at home, but it is now about 60% of our needs.”
Prices for ferrous scrap arriving in containers to India are likely to drop in the coming weeks with the mood among market participants in rapid decline, sources in the country told Metal Bulletin.
“The sentiment is not positive. If Turkey comes back and buys at a lower price from Europe, there will be a very sharp drop in prices [to India],” one trader said.
“It’s pretty quiet and sales are quite low out here in India for finished steel,” one seller said. “The holiday season is coming [and] people aren’t buying.”
Despite the numerous negative factors affecting the market, Indian import scrap prices stayed relatively stable this week.
Metal Bulletin’s index for containerised shredded scrap imports into India was $334.77 per tonne cfr Nhava Sheva on Friday, inching up by $1.30 per tonne week-on-week.
Prices were boosted by a deal concluded for 10,000 tonnes of mostly USA-origin shredded scrap for $340 per tonne cfr Nhava Sheva. The deal was understood to have been finalised at the start of this week.
Although market sentiment has weakened in the country, one buyer argued that Indian import prices are unlikely to plummet in the coming weeks.
“We are already paying much less than Turkey, so Indian prices should not go down much more,” the buyer said.
Turkish domestic scrap prices continued to drop at the beginning of the week, as demand for the material was weak and stocks were high.
The main factor behind the fall in prices was the weak demand from the mills, according to the sources.
“We have plenty of scrap stock so we lowered our buy price for domestic scrap,” a Turkish mill source said. “We are also waiting for deep-sea scrap cargoes to arrive, which is why we do not want to buy more local scrap.”
Nadia Popova in Moscow, Lisa Gordon in New York and Lee Allen in London contributed to this report.