At the beginning of the current week, SteelOrbis has reported that, although prices have remained firm, there has been no support from the local US scrap market for export prices, while Turkish mills report that they have received several ex-US offers. Sentiment in Turkey’s import scrap market is negative, while most market players are waiting for deep sea scrap prices to soften. On the other hand, some sources think that European suppliers’ insistence on keeping their prices firm has also helped ex-US prices to remain stronger than they otherwise would have been.
Towards the end of the week, it was clear that even the Europeans’ firm price strategy had failed to keep the market stable. Following the softening observed in an ex-Baltic scrap deal in Turkey, ex-US scrap prices also moved below the $420/mt CFR threshold. Without any confirmed ex-EU scrap deal, the Turkish scrap market is under significant pressure. Under the current circumstances, the Turkish scrap market was described by one market player as being “vulnerable.”
The downward pressure on Turkey’s import scrap market is clearly coming from the ex-US and ex-Baltic cargoes. Also, there are rumours about some European scrap sellers negotiating with Turkish mills, and some market sources said the Europeans have been more willing to cut their quotations at the end of the week. Meanwhile, a major European scrap supplier said that there will be another upward movement in the market. “We understand that the global economic indicators are not completely fixed, but they are improving. We can see Turkish mills are struggling with finished steel sales. But we can also see that scrap availability has not recovered and that additional capacities coming online in the EU will shrink tonnages further for Turkey,” the source commented. If European sellers fail to keep their prices firm for Turkey, the downtrend of the deep sea segment may become deeper, though no market players expect a price collapse in the coming round of bookings.
Under the current conditions, the deep sea benchmark HMS I/II 80:20 scrap prices in CFR terms have moved down by 1.36 percent week on week. The prices are now 2.05 percent lower month on month in the deep sea segment, with prices being in the range of $415-419.5/mt CFR.
US scrap prices have wobbled slightly this month from January settled levels, with prices holding at sideways to down $30/gt, depending on the region and the grade. As previously predicted, prime grade scrap once again came under the most downward price pressure.
SteelOrbis has learned that the current price for Mexican domestic shredded scrap is now at MXN 8,650 ($494/mt), compared to MXN 9,150/mt ($519/mt) last week. Additionally, HMS I/II scrap prices are now being heard at MXN 7,000/mt ($400/mt), compared to MXN 7,700/mt ($437/mt) a week ago.
Local scrap prices in Italy have remained unchanged this week, although some steel mills have tried to lower their purchase prices by about €5/mt due to low demand for finished steel products, especially longs. An official at one Italian steel mill said: "Mills are willing to lower prices. There is a lack of steel consumption and the demand is low. We are not selling." On the other hand, according to traders, there are no conditions for a price drop because there is not much scrap available for collection and collection costs are high in Europe, unless "the international [scrap] market goes down significantly, then things could change,” as one trader said. As a matter of fact, signs in Europe are not encouraging, with Germany reducing imports of finished steel and slowing down production. In addition, according to one market participant, major Spanish mills are reported to have lowered scrap purchase prices by €15-20/mt, but it remains to be seen whether the new levels will be accepted by sellers. Uncertainty about medium-term price trends prevails in the market because of the many variables at play. On the export side, it appears that activity has slowed down as the current levels from Italy at $410/mt CFR Turkey or less are not very attractive to sellers. However, traders expect Turkish mills to resume buying at higher prices soon.
South Korean steel producer POSCO has shared bids for Japanese scrap, reducing them by JPY 1,500/mt as compared to the levels recorded in late January. With the Japanese yen’s depreciation, dollar-based prices have moved down further. Ahead of the Lunar New Year holiday, domestic scrap prices in South Korea are once again decreasing. Meanwhile, Hyundai Steel has not shared bids for Japanese scrap since last August, though SteelOrbis hears that the producer is procuring scrap from its yards in Japan. POSCO has reduced its bids for Japanese shredded scrap by JPY 1,500/mt as compared to the levels recorded on January 22 to JPY 57,000/mt ($382/mt) CFR.
Although Japan’s Kanto scrap export tender have resulted in a very slight price increase as compared to the levels recorded in January, the depreciation of the Japanese yen prevented dollar-based quotations to move up. As a result of the Kanto tender, highest bid is at JPY 53,087/mt FAS, indicating an increase by JPY 6/mt as compared to the levels recorded early January. The dollar-based prices have decreased from $362/mt to $355/mt over the past month. SteelOrbis has learned that 15,000 mt of scrap has changed hands in the tender, the buyer is once again Bangladesh. As of today, February 9, Tokyo Bay FAS-based prices for H2 grade scrap are still at JPY 51,000/mt ($341/mt), lower by $4/mt as compared to February 2.
SteelOrbis’ reference price for ex-Japan H2 scrap has increased slightly on the upper end by JPY 600/mt to 52,000-54,100/mt ($348-362/mt).
Trade activity has improved in Bangladesh’s import scrap market this week given that import prices have moved down slightly coupled with improved letter of credit (LC) approvals by banks, while overall finished steel demand has as expected increased after the January elections. More specifically, while most offers for ex-Australia shredded scrap in containers have been voiced at $435-440/mt CFR, down by $5/mt week on week, several deals for around 3,000 mt of Australian origin shredded have been signed at $431-435/mt CFR. Besides, at least 7,000-8,000 mt of ex-Australia HMS I/II 80:20 scrap in containers have been booked at $415-418/mt CFR, with most offers still voiced at $420/mt CFR. Meanwhile, offers for ex-Australia PNS scrap have settled at $445/mt CFR, while buyers’ bids have been heard at $435-440/mt CFR. Some revival in trade activity has also been reported in the bulk segment, with at least two deals for ex-US and ex-Australia scrap signed at slower levels over the past week, while offers for ex-US scrap in bulk have been estimated at $425/mt CFR for HMS grade and at $430/mt CFR for shredded scrap, down by $5/mt over the past week.
In Pakistan most offers for containerized scrap have showed a slight increase over the past week, with only occasional deals reported, though trade activity has been sluggish due to the elections in the country this week. Offers for ex-Europe shredded scrap in containers have been voiced at $445/mt CFR, versus $440-445/mt CFR last week, while deal prices have still been estimated at a slightly lower level or at $442/mt CFR, with a few bookings reported by Pakistani traders this week. Offers for ex-US shredded scrap on containers have been reported at $435-440/mt CFR against $435/mt CFR last week. At the same time, offers for ex-Middle East, ex-Dubai in particular, HMS I/II 80:20 scrap have moved to $415-420/mt CFR, up by $5/mt week on week. However, according to market insiders, booking origins have shifted mostly away from Dubai to the EU, the UK and the US due to uncertainties over implementation of export duty.