This week, several deals for import scrap have been reported in Turkey, particularly from the Baltic region and the EU, giving the market some mixed signals. A transaction from France indicated $377.5/mt CFR for HMS 1&2 (80:20), up from the previous ex-UK deal at $368/mt CFR, which brought some optimism to the market. Particularly, at the time, ex-Baltic scrap indications inched up to $380-383/mt CFR for the same grade, while the US scrap moved up to $383-385/mt CFR. Sentiment has been mixed, with one deal reported from Latvia at $375/mt CFR, followed by two sales (one from Lithuania and one from Poland) at $378/mt CFR for HMS 1&2 (80:20). Given the declines in China, some scrap market players share a pessimistic mood, also worsened by weak finished steel sales. In the meantime, deep sea scrap suppliers may also not be in a position to provide discounts for Turkish mills since their breakeven is estimated by a few sources at $370-375/mt CFR for HMS 1&2 (80:20). According to market players, Turkey may require up to 15 scrap cargoes for April, while some estimate the number may be lower given the slowness of finished steel sales and the uncertainties connected with the upcoming local elections. In addition, in the billet and slab segments, business is slow and supply is limited, at least for the combination of the acceptable price and volume. Currently, the captive billet production cost of Turkish mills is estimated at around $540-545/mt, while for slab it is around $20-25/mt higher.
This week, according to market sources, domestic scrap prices in the US Northeast have settled down across the board, similar to the Ohio Valley, with HMS and P&S scrap settling down by $40/gt, shredded down by $50/gt and primes down $60/gt. As for exports, by the end of the week there were few offers for Turkey, market players reported.
Over the past week, local scrap prices in Italy have fallen again, by €15/mt, depending on quality and the steel producer. Mills have adapted their purchase prices to the international market and, in some cases, suspended deliveries in the face of very few orders for finished products. Furthermore, steel mills are seeking to lower purchase prices by €20-30/mt because the finished market is not doing well and shows no signs of recovery. Moreover, both prices and orders for finished products are weak and could fall further under pressure from the currently low import longs prices.
However, some scrap dealers are aiming to resist mills’ purchase price reductions as prices cannot drop much further since there is a shortage of material.
Prices for ex-Japan scrap in Kanto tender have dropped, by almost JPY 3,000/mt, as had been expected, due to the negative sentiments globally, the weak demand in Asia and the decline in the Turkish market last week. In the Kanto export tender, the highest bid was at JPY 50,100/mt FAS, while this time the volume sold in the tender was just 5,000 mt compared to the previous 15,000 mt. The buyer was thought to be South Korea first, but most market sources agree that the tonnage will finally go to Vietnam due to the focus of mills in South Korea on local purchases and the absence bids for imports. The FAS-based price translates to JPY 51,100/mt FOB or $345/mt FOB.
The leading Japanese EAF steel producer Tokyo Steel has decreased its scrap procurement prices for all plants by JPY 1,000/mt - a larger decrease compared to the previous negative correction by JPY 500/mt on March 7. This has been explained by the weak demand for scrap in Asia lately, reflected in the weak Kanto export tender results, while the situation in China has also remained very negative.
In Taiwan’s import market, offers for ex-US HMS I/II (80:20) scrap in containers have fallen to $345-350/mt CFR by the end of the week, losing at least $10/mt since last Friday. A deal was done at $350/mt CFR, but early this week, signaling a decline of about $5/mt over the past week. Ex-Japan offers for H1/2 (50:50) scrap by bulk to Taiwan have been rare, but have dropped by $5-10/mt to $365/mt CFR and the latest deal was done at $360/mt CFR versus $368/mt CFR last week for this grade. Some suppliers are cautious in offers, seeing this as a bottom, but, if the downtrend resumes in Turkey and the Chinese market remains negative, there will be a lack of options for sellers except to cut prices further in the near future.
In Bangladesh, most offers for scrap both in containers and in bulk have remained relatively stable, though with a downward bias in some offers. At the same time, although the situation regarding letters of credit (LCs) has improved in Bangladesh, trade activity in has been moderate. Notably, following a long pause in scrap purchases in bulk, a deal for 32,000 mt of ex-US scrap has been reported at $400/mt CFR for HMS grade, $405/mt CFR for shredded and at $410/mt CFR for bonus scrap. Furthermore, in the containerized segment, most offers have been maintained at the same levels as last week but with a downward bias in some offers. In particular, offers for ex-Australia and ex-EU shredded scrap have been estimated at $415/mt CFR, against $420/mt CFR last week, while offers for HMS I/II 80:20 have been heard at $400/mt CFR, the same as last week.
In Pakistan, trade activity in the import scrap market has improved to some extent in this week given the further decline in most import offers. Specifically, new deals for around 3,000 mt in total of ex-UK/EU shredded scrap in containers are reported to have been signed at $407-415/mt CFR levels, while most offers have been heard at $415/mt CFR, against $415-425/mt CFR last week. At the same time, more deals for ex-US shredded scrap in containers have been voiced at $405/mt CFR, down by $5-10/mt week on week. However, according to most sources, most expect the markets to slow down for at least a week since, although Pakistani customers have rather high expectations from the new government, Ramadan which has started this week will affect business.