At the beginning of the current week, Turkey realized that ex-US scrap prices were falling behind the curve. The upward movement of ex-US scrap prices were considered slower than the trend in the EU. As the market was trying to find its way, sellers were keeping their prices firm and continued to ask for prices above $380/mt CFR. A US scrap seller was offering a cargo to Turkey at around $385/mt CFR for the benchmark grade, while SteelOrbis also heard that an EU-based supplier offered this grade at around $380/mt CFR. Some scrap sellers of various origins that had been seeking buyers withdrew from the market due to their expectations of a recovery in prices.
At the end of the week, deep sea scrap prices from the US and Europe have consolidated in an unusually narrow range of $380-382/mt CFR, in three separate deals. All three bookings were done very lately, close to one other. Market sources report that the consolidation of prices will not last long.
Late yesterday, March 21, another ex-Baltic deal was confirmed to have been done by a Marmara-based producer with HMS I/II 80:20 scrap at $382/mt CFR, and shredded and bonus grades standing at $402/mt CFR. This deal increased ex-Baltic scrap prices by $2/mt to the same level as the most recent ex-US booking. The general range of deep sea scrap prices is unusually narrow at present, which cannot be sustained for long. In general, prices are expected to move up slightly. European HMS I/II 80:20 scrap prices are expected to remain higher than $380/mt CFR in the coming deals, while US suppliers are expected to aim for $385/mt CFR and above. Not much of an increase in deep sea scrap prices is anticipated right now, and market sources are cautious ahead of the local elections to be held in Turkey on March 31. Collection prices in the EU remain in the range of €310-315/mt DAP.
Following the decision of the Turkish central bank announced in the middle of last week that ordered banks to put portions of their required lira reserves into blocked accounts within the scope of the central bank’s policy to tighten monetary policies, loan interest rates have risen to 70 percent, market sources report. Finance in the market has become expensive and cash flows are disrupted. Turkey’s central bank increased interest rates to 50 percent in a surprise move on Thursday. The Turkish lira has appreciated to 31.86 against the US dollar. “This appreciation is not permanent. Traders may decide to buy some rebar due to their expectations of a further depreciation in the coming period,” a trader commented. The lira was standing at 32.41 to the dollar before the latest announcement from the central bank.
Under the current conditions, the deep sea benchmark HMS I/II 80:20 scrap prices in CFR terms have moved up by 0.07 percent week on week. The prices are now 6.84 percent lower month on month in the deep sea segment, with prices being in the range of $381-382/mt CFR.
The downtrend in US scrap prices during this month’s buy-cycle came as a stark surprise to most players in the market, as hardly anyone had anticipated that primes would drop by as much as $60-$70/gt on primes, depending on the region. Next month, however, roughly half of sources close to SteelOrbis say they believe that the market should be mostly steady. A source said he is pegging April at sideways to soft sideways. “Mill demand [and our inbound flows] seems to be in balance,” he added, noting he believes a lot of what happens in April will likely hinge on HRC sales and lead times.
SteelOrbis has learned that the current price for Mexican domestic shredded scrap is now at MXN 6,950/mt ($407/mt), unchanged in pesos from last week. Additionally, HMS I/II scrap prices are now being heard at MXN 4,800/mt ($281/mt), also unchanged in pesos compared to last week.
Domestic scrap prices in Germany have declined over the past month as SteelOrbis had anticipated. The lack of India as an export option was putting pressure on the European market, as did the downward movement of Turkey’s import scrap prices. European steel prices were not providing support for the scrap segment. There is still slowness in scrap generation and collection. While Turkey was putting pressure on the market, the collection prices of EU-based export yards only declined to €290/mt DAP and most players said there was almost no flow to yards. “The prices are determined by supply and a balance is still not sustained,” a scrap supplier commented. While the fluctuation of the scrap market is expected to continue, there is no downward potential mentioned for now. According to the latest data provided by the BDSV, in the first 20 days of March, scrap prices moved down by €11.3-20.9/mt month on month.
After falling by €20-25/mt in recent weeks, local Italian scrap prices seem to have settled. The market has been quiet this week. Some traders have reported that scrap flows have declined further due to falling prices, and this may support scrap prices. A positive signal also seems to be coming from the international market, with the latest deal for HMS 80:20 from France closed at $381/mt CFR Turkey, up $3/mt. According to market participants, this could be indicative "if not of a rebound, at least of stability. Then we will see after the first week of April." Steel mills, for their part, are very concerned about the sales of finished products, which do not seem to be improving, and are therefore considering further declines in scrap purchase prices. Moreover, according to one market participant, some mills may slow down production in the coming weeks due to low orders and the Easter holidays. Over the past two weeks, there has also been a drop in prices in the Spanish scrap market, following the trend abroad, but they have now stabilized. Traders do not expect further changes in quotations as deliveries will be slow with the Easter holidays approaching, but they do report renewed interest in imported material.
Vietnamese steel producers report that they still have high levels of inventories, that local scrap flow is on the good side and that “they do not need much imported scrap.” As a result, scrap imports are rare in the country. Offers for Japanese H2 grade scrap to Vietnam have been at around $372-375/mt CFR this week. There was a deal done in southern Vietnam this week for Japanese H2 grades at $375/mt CFR. Meanwhile, a deal for ex-US containerized HMS I/II 80:20 scrap was signed at $355/mt CFR Vietnam. The SteelOrbis reference price for ex-Japan H2 scrap stands at JPY 49,500-51,500/mt ($328-341/mt) FOB.
Taiwan’s import scrap prices have stopped moving down, while local scrap yards have very low stock levels. Market sources believe that rebar and scrap prices in the country have hit the bottom. Offers for ex-US HMS I/II (80:20) scrap in containers are once again at around $350-355/mt CFR. Ex-Japan offers for H1/2 (50:50) scrap by bulk to Taiwan have moved up from $365/mt CFR recorded last week to $365-373/mt CFR.
In Bangladesh, most offers for ex-EU/UK and ex-Australia shredded scrap in containers have been estimated at around $415-420/mt CFR, against $410-415/mt CFR last week. Besides, several deals for ex-Australia HMS grade scrap have been signed at $400-405/mt CFR, mainly the same as last week. According to sources, new offers for HMS scrap may be stable next week, while shredded prices will likely not be below $420/mt CFR. However, despite the more positive outlook for the future price trend, most Bangladeshi customers doubt the market will be able to absorb any price hikes given the slow demand during Ramadan. Furthermore, it is believed that there will be no more bulk deals until the Eid holiday in April. Indicative offers for ex-US scrap in bulk have remined at $405/mt CFR, the same as last week, while new offers are expected to increase to $410/mt CFR next week, according to sources.
In Pakistan, business activity in the import scrap market has remained slow due to weak finished steel demand and the low capacity utilization rates of local steel producers during Ramadan. According to sources, a few deals for ex-EU/UK shredded scrap have been heard at $410/mt CFR, down by $5/mt CFR, while most offers have settled at $410-415/mt CFR, versus $415/mt CFR last week. Furthermore, following several deals for ex-US shredded scrap in containers at $405/mt CFR, this week at least 1,000-1,500 mt are reported to have been booked at $402/mt CFR, according to sources.