WEEKLY SCRAP WRAP: Weak demand plagues global markets

Global scrap prices continued to fall in the week ended Friday August 3 due to weak demand pushing prices down.

The markets in Turkey, Taiwan and the United States were all suffering from poor demand this week. And although prices ticked up slightly in the Indian market, sentiment remained negative due to the low level of demand and the influence of the faltering Turkish market.

Turkey imports
The Turkish market saw little trading activity this week, with only one deal being heard.

Mills broke their silence in trading activity on Wednesday when a steel mill in the Marmara region booked a European cargo, comprising 20,000 tonnes of HMS 1&2 (75:25), 12,500 tonnes of bonus and 2,500 tonnes of new cuttings at an average price of $328.50 per tonne cfr.

Poor demand for finished steel has continued since July and has dissuaded mills from booking more scrap. Only those with urgent needs for material are entering the market currently.

Metal Bulletin’s daily index for Northern European HMS 1&2 (80:20) closed the day at $324.91 cfr Turkey on August 3, down from $328.77 per tonne cfr Turkey at the start of the week.

US exports
Ferrous scrap export prices came down on both US coasts, due to Turkish and South Korean mills securing lower prices.

The latest cargo to Turkey from the US East Coast, first heard on July 26, had HMS 1&2 (80:20) priced at $335 per tonne cfr, for September shipment, market participants said.

That cargo, they said, set the stage for lower prices in other regions, with one South Korean steelmaker taking up a 48,000-tonne bulk cargo, sold off the US West Coast, on July 31, with the HMS 1&2 (80:20) portion priced at $349 per tonne cfr.

The previous West Coast deal to South Korea, which was probably concluded around July 12, was at $356-$357 per tonne cfr for HMS, indicating a $7-8 per tonne dip in prices over three weeks.

The more recent South Korean cargo comprised 8,000 tonnes of HMS, 25,000 tonnes of shredded, 10,000 tonnes of plate and structural scrap (P&S) and 5,000 tonnes of busheling, market participants said, although price information was only immediately available for the HMS portion.

Another US West Coast exporter, during the week of July 23, reportedly sold bulk HMS 1&2 (80:20) to Vietnam at $363 per tonne cfr, although tonnages in the sale were unknown.

That $363 per tonne cfr price, probably to a southern Vietnamese mill, seemed a “little bit higher” than general market prices into Vietnam, one Southeast Asian trader said on July 30.

A second scrap trader noted that containerized scrap was flowing into South Korea, with scrap initially intended for Vietnam overfloings into Taiwan, where the market has become oversupplied. That in turn pushed containerized scrap into South Korea, where demand for such material is limited.

“Containers that are coming back from Vietnam [to South Korea] are a little bit cheaper than the market price,” the second trader said, who typically handles bulk cargoes into South Korea.

Sales into New York docks dropped to $275 per gross ton recently, with one exporter making a “big push” to come down to those prices as fast as possible, in light of the latest export sales, according to a third scrap trader based on the US East Coast.

But exporters “can’t really go any lower and get the tons they need,” this trader added, whose company also processes and sells scrap to US exporters.

US East Coast scrap cargo sales into South Asia have been few and far between recently, with July and August typically slow due to monsoon rains in that region, he said.

Prices for US containerized shredded scrap were $325 per tonne fas East Coast recently, down by $20-$25 per tonne in recent weeks, mirroring declines in bulk scrap prices, he added. He expected containerized shredded prices to stick at $320-$325 per tonne fas throughout most of August.

US East Coast exporters still need scrap, and may not have much inventory, one seller into the Philadelphia docks said. “Export-wise, I don’t think dealers are rushing to sell into docks at less than $300 per gross ton for HMS 1,” he said.

“I don’t see exports getting better, but I don’t see it getting a whole lot worse in the coming weeks” in terms of price, even if US domestic scrap settlements edge lower in August, he predicted.

Taiwan imports
Import prices for containerized HMS in Taiwan continued to dip due to weak demand from end-users.

Metal Bulletin’s assessment of import prices for US-origin HMS 1&2 (80:20) sold into Taiwan was $325-330 per tonne cfr for the week to Friday, down by $5-8 per tonne from last week.

US-origin containerized scrap was offered at $330 per tonne cfr Taiwan this week, down from $335 per tonne cfr Taiwan last week. Bids were made at $325 per tonne cfr Taiwan.

Deals were concluded at $325-330 per tonne cfr Taiwan, with one major end-user having purchased about 5,000-6,000 tonnes.

Demand was weak because end-users had sufficient materials in their inventories and were not urgently looking for spot cargoes.

“Taiwanese steel mills are still running at reduced rates due to [summer] electricity rationing imposed by the government, so demand is not that strong,” a source at a steel mill said.

Supply was also ample, with traders still seeing thin demand from other container import markets such as Vietnam, resulting in them trying to offload scrap to Taiwan.

There were limited Japan-origin cargoes for HMS 1&2 (50:50) ferrous scrap offered to Taiwan because of strong domestic demand in Japan, a Taiwanese trader said.

Demand in Taiwan was expected to pick up from the end of August once electricity rationing is lifted and the territory’s steel mills increase their operating rates.

India imports
Metal Bulletin’s weekly index for containerized imports of shredded scrap into India ticked upward to $357.56 per tonne cfr Nhava Sheva on Friday, from $355.27 per tonne cfr Nhava Sheva last week.

Last week’s price was the lowest seen so far this year, and some market participants felt that prices would not be viable if they fell any lower.

Trading activity remained limited this week, according to one buyer.

Only one deal was heard in the market for shredded, which was reported at $355 per tonne cfr Nhava Sheva for 1,000-2,000 tonnes. This was up from the $350 per tonne deal which signaled a fall in prices last week.

Although this deal was at a price $5 per tonne higher than last week, offers on the market were within a lower range this week, at $350-365 per tonne cfr compared with $360-370 per tonne.

“Turkish prices have come down a lot [and] the market is back on standby,” a trader said.

“People are waiting for it to get better but it’s not happening. Prices started falling with the monsoon season, but now that international prices are also down, I don’t have much hope of things getting better,” he added.

“These prices are too low to sell,” a second trader said.

“During the summer months, material collection is reduced and the Turkish market is not stable. There could be a price correction [upward], maybe by next week, because market sentiment is low. Demand in India is low because of [the lack of] construction demand [in the monsoon season]. It’s a waiting game now,” he added.

Turkey domestic
The price of domestic auto bundle scrap in Turkey was steady while the price of shipbreaking scrap fell slightly because of weak demand, sources said on July 30.

Steel producers in the Izmir region decreased their buying price for ship scrap by $5-9 per tonne over the week, to $330-338 per tonne delivered.

Metal Bulletin’s weekly price assessment for Turkish domestic melting scrap from shipbreaking therefore fell to $330-340 per tonne delivered, from the previous week’s $345-347 per tonne.

In the meantime, the price of auto bundle scrap in the country remained stable. Two mills changed their buying prices over the week but they remained within the prevailing range.

Long steel producer IDC decreased its buying price for the material by TRY30 per tonne to TRY1,520 ($301) per tonne delivered, and Özkan decreased its price by TRY10 to TRY1,555 per tonne delivered.

Metal Bulletin’s price assessment for auto bundle material remained unchanged week-on-week at TRY1,510-1,680 per tonne delivered on July 30.

Demand for finished steel products in the country was subdued because of the seasonal summer lull in construction, and the approaching religious celebrations of Hajj and Eid Al-Adha. No rebound in prices was expected before the end of August.

Nat Rudarakanchana in New York, Serife Durmus in Bursa and Paul Lim in Singapore contributed to this report.