At the beginning of the current week, with the deals disclosed in Turkey’s import scrap market it was observed that a Canadian supplier had continued to contribute to the downward pressure on prices. Due to the high number of offers both from the EU and the US, most Turkish mills did not feel pressure to move quickly to conclude new bookings. On the other hand, winter conditions are taking their toll on the collection side, and most deals done recently will require more collection activity to gather the agreed tonnages. In the following days, Turkey’s ex-EU scrap prices remained relatively stable. On January 24, an Amsterdam-based scrap exporter shared bids with Germany for HMS I/II 80:20 scrap at €335/mt DAP and bonus grade scrap at €360/mt DAP. By the end of the week, Turkey has accepted prices at around $420/mt CFR for premium grade scrap in newly closed bookings. As SteelOrbis mentioned in previous reports, the future trend of Turkey’s import scrap market is expected to be shaped by US-based sellers’ pricing strategies. For now, US-based sellers are giving the impression that they are not willing to reduce their quotations for Turkey. A similar stance is observed in the EU, where slow scrap flow is pushing collection prices up.
Today, January 26, another ex-US scrap booking was disclosed for higher grades. SteelOrbis has learned that the deal was done a couple of days ago by a Marmara-based producer for 15,000 mt of shredded and 15,000 mt of bonus grade scrap at the average level of $438.5/mt CFR. The HMS I/II 80:20 price based on this information is around $418.5/mt CFR. However, since there have been more deals closed lately at around $420/mt CFR, SteelOrbis will not change its reference prices for ex-US HMS I/II 80:20 scrap.
SteelOrbis hears that some Turkish mills are testing the market, but that they are in no rush to book new cargoes. Turkey’s deep sea scrap bookings for February shipment have reached at least 34 cargoes, seven of which were signed in December. Most European scrap suppliers have taken a step back as they do not accept the bids coming from Turkish mills. A similar move has been made by some of the US suppliers. Accordingly, a partial balance has been reached in the scrap market, at least in terms of unwillingness to conclude transactions.
Under the current conditions, the deep sea benchmark HMS I/II 80:20 scrap prices in CFR terms have moved down by 1.07 percent week on week. The prices are now 0.36 percent higher month on month in the deep sea segment, with prices being in the range of $412-420/mt CFR.
In our last report a week ago, sources throughout the US believed that next month’s settled prices were likely to trend at sideways to slightly down. Although scrap inflows in some regions have diminished due to frigid temperatures and snowstorms (with some dealers indicating their inflows are down by as much as 15-30 percent from January), some suspected that mills might attempt to put downward pressure on scrap prices due to softness in the flat rolled steel market. This week, however, most sources polled said they believe that dealers will be able to prevent February prices from sliding.
SteelOrbis has learned that the current price for Mexican domestic shredded scrap is now at MXN 9,450 ($537/mt), compared to MXN 9,050/mt ($520/mt) last week. Additionally, HMS I/II scrap prices are now being heard at MXN 8,000/mt ($455/mt), compared to MXN 7,800/mt ($448/mt) a week ago.
Domestic scrap prices in Germany have continue to follow the trend observed in Turkey. Deep sea scrap prices for Turkey increased by $12/mt in the first half of January, while scrap collection activities have still been negatively impacted by the cold weather conditions. According to the latest data provided by the BDSV, in the first 20 days of January, scrap prices rose by €4.2-15.5/mt month on month.
There has been little movement in the local Italian scrap market over the past week, and prices have remained unchanged week on week. Market players said steel mills are not very interested in buying scrap and have reduced quantities in the latest deals.
Rumors of a possible turnaround are circulating in the market, and some sources think prices will edge down in the near future. However, others believe the scrap market may remain strong next month as finished steel prices are expected to increase in February and low availability of some scrap categories will likely support prices.
South Korean producer POSCO has shared bids for Japanese scrap, increasing them by JPY 1,000/mt as compared to the levels recorded in the middle of last month. However, the Japanese yen has depreciated sharply during this period and the increase in price on yen basis has meant a drop in the dollar-based price. SteelOrbis has learned that POSCO has shared bids for Japanese HS scrap at JPY 59,000/mt ($399/mt) CFR, JPY 1,000/mt higher than the producer’s previous bids but $10/mt lower on dollar-basis given the depreciation of the Japanese yen.
The leading Japanese EAF steel producer Tokyo Steel has reduced its scrap purchase price for its Utsunomiya plant, after the hike announced on January 16. Tokyo Steel’s general range for H2 grade scrap has moved sideways at JPY 50,000-53,000/mt ($339-359/mt) depending on the mill.
Taiwan is still focusing on ex-US scrap imports and no ex-Japan deal has been booked over the past week. Offers for ex-US HMS I/II (80:20) scrap in containers to Taiwan have remained stable week on week at $375-385/mt. A producer booked deals for this grade at $380/mt CFR earlier this week, while others have closed deals at $380-382/mt CFR. Japanese scrap suppliers’ offers for H1/2 (50:50) scrap by bulk to Taiwan have moved to $390-407/mt CFR, indicating a $4/mt decline on the upper end over the past week.
In Bangladesh, most import offers for scrap both in containers and in bulk have remained stable this week, while trade activity has remained limited given that most buyers have been affected by the dollar crisis and difficulties in opening letters of credit (LCs). Offers for ex-EU shredded scrap in containers have been voiced at $440/mt CFR, down by $5/mt on the higher end of the range over the past week, with no new deals reported so far. However, several deals for around 3,000 mt in total for ex-Australia shredded scrap have been heard at $435/mt CFR, the same as last week. In the bulk segment, trade has continued to be weak, with indicative offers for ex-US HMS I/II 80:20 scrap standing at $425-435/mt CFR, the same as last week, while prices for ex-Japan H2 have been assessed at around $430/mt CFR.
After quite a high number of deals were signed last week, this week most Pakistani buyers have been inactive due to slow end-user demand ahead of the upcoming elections in February. Particularly, following several deals signed for ex-EU/UK shredded scrap in the range of $437-440/mt CFR last week for around 7,000-10,000 mt in total, this week most offers have been voiced at the last week’s levels of $435-445/mt CFR, though no fresh deals have been reported so far. Meanwhile, offers for ex-Middle East HMS scrap have been heard at $410/mt CFR for shipment at the beginning of February, versus $405-410/mt CFR last week. Besides, according to sources, offers for shredded scrap for Middle East origins, ex-Bahrain and ex-Dubai, in particular, have been voiced at as high as $455-465/mt CFR for February shipment.