Earlier this week, Turkey’s import scrap purchase prices were almost unchanged, though there was positive sentiment in the market, particularly among scrap sellers. Demand for scrap was livelier despite the completion of deals for June shipment. Several sources reported that the lively demand shows that Turkish mills aim to step up their purchases ahead of the Feast of Sacrifice holiday which starts on June 16.
As a result, deep sea scrap prices in Turkey moved up in the second half of the current week. This was has not come as a surprise. However, the extent of the rise remains to be seen. Turkish mills have started to increase their domestic rebar offers amid the positive sentiment in the scrap market, though it is too early to say whether the new levels will be accepted by traders. While Turkey is trying to secure some scrap tonnages ahead of the Feast of Sacrifice holiday, they are also trying to fill the gaps in their inventories. Therefore, the lively demand for scrap is expected to continue in the coming week. However, SteelOrbis hears that the number of offers shared in the deep sea scrap market is on the low side since sellers now think deep sea scrap prices are going to move up further.
Under the current conditions, the deep sea benchmark HMS I/II 80:20 scrap prices in CFR terms have moved up by 1.46 percent week on week. The prices are now 0.39 percent higher month on month in the deep sea segment, with prices being in the range of $378-385/mt CFR.
As the first week of June started, scrap traders in the US reported a wild scenario unfolding with June scrap prices talked initially at minus $10/nt ($11/mt) to May, later at minus $20/nt ($22/mt) and still later at minus $30/nt ($33/mt). Traders said prices were even mentioned at as low as $50/nt ($55/mt) discounts to May, though few said they expected many scrap dealers to comply at discounts that large. Market insiders added that finished steel prices have settled (not dropping any more) and that mills that were used to recording profits “don’t want to give them up.” A Midwest scrap insider opined about the wild speculation for June scrap pricing, stating, “It appears primes (busheling and bundles) are going to come in down $20-30/nt ($22/mt to $33/mt). The secondaries (P&S and HMS I) are not going to be down as much, maybe minus $20/nt ($22/mt). The fear is that, if it falls much more, collections at the yards won’t be that much.”
SteelOrbis has learned that the current prices for Mexican domestic shredded scrap have risen by MXN 500/mt ($27/mt) over the past week to MXN 7,050/mt ($383/mt).
Additionally, HMS I/II scrap prices have increased by MXN 300/mt ($16/mt) over the same period to MXN 5,750/mt ($312/mt).
Although some steel mills have been buying at around €5/mt lower this week, local scrap prices in Italy have remained in the same range as last week. According to one source there is a lot of competition in buying and collecting for traders and they have very thin margins. The reason, again, is the scarcity of scrap available in the market, which, according to traders, has led to good demand for raw material despite the fact that steel mills are working at about 80 percent of capacity. Given the situation, traders expect stable quotations throughout June because, if scrap prices were to fall further, “it would create an imbalance because traders would offer lower volumes”, according to one source.
Producers, on the other hand, are planning to lower scrap purchase prices further by €10/mt in the coming weeks as they expect the finished market to deteriorate between now and the end of July. Sources report that many producers are planning very long stops for August and maybe even earlier.
According to sources, local scrap prices in the Spanish market have remained unchanged this week even though one steel mill tried to lower its purchase prices. Demand is quite lively due to low energy prices and market participants do not expect any changes for June.
The leading Japanese EAF steel producer Tokyo Steel has announced a cut of JPY 500/mt in scrap purchase prices at three of its plants. The general purchase price ranges for H2 and shindachi grade scrap have not changed after this move. After the announcement, Tokyo Steel’s general range for H2 grade scrap has remained stable at JPY 48,500-51,500/mt ($311-330/mt) depending on the mill.
Taiwan’s import scrap market has followed diverse trends this week, with ex-US prices moving down and Japanese scrap prices increasing. Meanwhile, end-users of rebar are asking for lower prices, while Taiwanese mills are unwilling to sell much at these levels since it is not profitable. Offers for ex-US HMS I/II (80:20) scrap in containers have maintained their downtrend and are now at $342-348/mt CFR. Ex-Japan offers for H1/2 (50:50) scrap by bulk to Taiwan are at $358-366/mt CFR.
Another note came from the Souh Korean new agencies, stating South Korea’s scrap exports have exceeded 40,000 mt per month, double year on year. This is very unusual for the country, but the South Korean scrap market has been fully dependent on local buyers for years and only exports when local prices hit very low levels. For a while now, the local South Korean market is considered to have the lowest price in the region and, in this context, domestic scrap purchases by local mills reached record levels in May. As SteelOrbis reported earlier, South Korean producers bought 95 percent of their scrap needs from local suppliers in May. The exports are the result of low scrap prices, as well as the capacity utilization rate cuts at South Korean EAFs. A source at a major South Korean producer stated, “One of the EAF-based mills decided to operate only at night time due to the week rebar demand and in order to reduce electricity costs which at night are comparatively cheap. Some news articles mentioned that the capacity utilization rate for rebar in South Korea is about 60 percent. I think those factors represent the market situation.”