At the beginning of the current week, a deal done from Europe showed that EU-based scrap sellers had managed to increase their prices above $385/mt CFR Turkey. This jump in the ex-EU scrap prices came as a surprise to some market players who had been expecting ex-US scrap prices to hit these levels first.
Expectations regarding ex-US prices were realized very quickly: just a day later, ex-US and ex-Baltic scrap prices moved up in new deals. Ex-US scrap reached $389/mt CFR, pulling ex-Baltic prices up too, with European scrap prices standing firm. Sellers continued to seek to push up their deep sea scrap prices, while Turkish mills were showing demand for scrap, though bids and offers were not aligned. “The collection prices are still firm in the EU. It may be easier for US-based scrap suppliers to sell at more attractive prices. The HRC market in the US is vulnerable. Local scrap prices in the country are expected to remain at soft sideways in April. But US sellers are also not inclined to accept lower than ex-EU scrap quotations,” a seller said.
At the end of the week, from the EU and the Baltic, Turkey’s deep sea scrap prices have stabilized. Turkish mills are inclined to accept the current levels, while showing some resistance to further increases. European scrap suppliers say that their collection prices are set to increase in the coming period. SteelOrbis hears that there is demand from alternative markets such as Egypt and Morrocco. One Baltic-based scrap supplier said prices received from the alternative markets are more attractive than those from Turkey.
As of today, March 29, a report of another ex-EU scrap deal is circulating the market, with the HMS I/II 80:20 scrap price remaining at $385.5/mt CFR, confirming that several sellers are inclined to take the opportunity to sell. Also, this may mean some do not quite believe there is the potential for a strong upward movement. While the concerns surrounding the local US scrap market have eased due to the change in expectations regarding the future trend, scrap suppliers from other regions are still not sure what will happen in terms of US cargoes to be shipped in May. Hence, more than one market source said this week that the market can go either way and no one would be surprised.
Under the current conditions, the deep sea benchmark HMS I/II 80:20 scrap prices in CFR terms have moved up by 1.57 percent week on week. The prices are now 0.64 percent lower month on month in the deep sea segment, with prices being in the range of $385-390/mt CFR.
Last week, SteelOrbis reported that scrap market sources throughout the US believed that April pricing was likely to hold at sideways to slightly down from March settled levels. This week, sources have said that, if anything, they believe that “soft sideways is a lot less likely than it was seven days ago.” This slight shift in sentiment is, several sources said, based on recent happenings within both the domestic finished steel and scrap export markets. For example, on Friday last week, flats sources from throughout the US said they believed that HRC prices were at or near the bottom. It is also worth mentioning that earlier today Cleveland Cliffs announced plans to raise HRC base prices to $45 cwt. ($992/mt or $900/nt) FOB mill. The April buy-cycle is expected to start by the middle of next week.
SteelOrbis has learned that the current price for Mexican domestic shredded scrap is still at MXN 6,950/mt ($410/mt) ex-works, unchanged in pesos from last week. Additionally, HMS I/II scrap prices are now being heard at MXN 4,900/mt ($289/mt), compared to MXN 4,800/mt ($280/mt) ex-works, last week.
Meanwhile, domestic HMS I grade scrap prices in Poland are currently standing in the range of €340-345/mt DAP. Market sources report that there are alternative markets paying more attractive price levels as compared to Turkey, though they are not buying bulk cargoes but only containers or small vessels.
Local Italian scrap prices have remained unchanged in the last week of March as most mills confirmed previous purchase prices. However, producers, especially in the longs segment, are concerned about the shortage of new orders and sales of finished products, and are therefore willing to decrease scrap purchase prices. In addition, steel mills are requesting less and less material and some are planning to stop or slow down production during the Easter holidays. Traders, however, do not seem to be worried by this situation as, according to them, there is no room for a drop in scrap prices given the shortage of material. Market participants are also waiting to see how the positive signals coming from abroad will affect the Italian scrap market. The expectation is for a stable price trend in April. The situation is also stable in the Spanish scrap market, both in terms of local and import prices. Market participants do not expect any changes until after the Easter holidays, when steel mills will announce their new purchase prices.
Having sold approximately 200,000 mt of rebar last week, Taiwanese producers have continued their sales and each is reported to have signed deals for another 10,000-20,000 mt. As a result, Taiwanese mills have halted their sales due to their belief that prices have hit the bottom. Offers for ex-US HMS I/II (80:20) scrap in containers have rebounded by $3-5/mt over the past week to $355-358/mt CFR. There have been deals closed in the range of $352-354/mt CFR. Ex-Japan offers for H1/2 (50:50) scrap by bulk to Taiwan have moved up from $365-373/mt CFR recorded last week to $370-377/mt CFR.
It was already known that South Korean steel mills are focusing on domestic scrap and that their long-term aim is to secure all their needs from their domestic market. South Korea’s domestic scrap generation equals to 84-85 percent of the total scrap need in the country. While working on this strategy, some South Korean producers have signed long-term agreements with some Japanese scrap yards as joint ventures. Due to these contracts, their Japanese H2 scrap procurements are now considered “domestic scrap.” SteelOrbis has learned that Japanese H2 scrap offers to South Korea stands at JPY 55,000/mt CFR, with the freight being at around JPY 3,700/mt for H2 grades. Meanwhile, ex-US bulk HMS I/II 80:20 scrap offers to South Korea now stand at $385-390/mt CFR.
As of today, March 29, Tokyo Bay FAS-based prices for H2 grade scrap are at JPY 51,000/mt ($337/mt). This level shows that FOB prices are at JPY 52,000/mt ($344/mt) for this grade.
Along with South Korea, Vietnam’s import scrap demand is also on the low side. Vietnamese producers are focusing on domestic scrap, lowering their prices instead of negotiating with the import scrap suppliers. Japanese H2 scrap offers to Vietnam are in the range of $372-375/mt CFR, remaining stable week on week.
As a result, SteelOrbis’ reference price for ex-Japan H2 scrap moves up from the lower end by JPY 1,000/mt or $5/mt to JPY 50,500-51,500/mt ($333-341/mt) FOB by the end of the week.