Turkey’s import scrap market has declined significantly in the current week. Turkish producers’ cheaper-priced billet orders have exerted considerable pressure on the scrap segment, while the number of deep sea scrap cargoes for September shipment has also declined after the import billet purchases. The lack of a revival in the rebar segment raises questions over whether some Turkish long steel producers will now decide to cut their production capacity utilization rates further. The resistance to buying deep sea scrap at the levels recorded at the end of July was successful, but market sources still report that there is not much interest shown by Turkish mills in scrap offers. On the other hand, some scrap suppliers have decided to limit their losses due to their expectations of a further decline in Turkey’s import scrap market.
The first deal done for September this week will be shipped in late September, but had an impact on the market with its ex-France HMS I/II 80:20 scrap price being at $376/mt CFR. While sources debated whether this level would stick or not, the latest ex-US bookings which surfaced today, August 9, have confirmed that deep sea scrap prices are on a downward trend now.
Market sources think Turkey will buy approximately 20 deep sea cargoes to be shipped in September, while a few sellers believe the number may be higher but not much higher. Turkey is buying billets within the scope of its inward processing regime. The inward processing procedure (IPP) is a customs procedure with an economic impact; based on the principle that goods not in free circulation are imported temporarily to the customs territory of Turkey for processing operations, with the re-exporting of the products obtained as a result of processing. Global players have been asking whether Turkey will continue importing billets since the lack of Turkish steel exports has been an issue for a long time, while most sources from Turkish mills said they have now more time to worry about the tonnages imported and that they are following the numbers very closely.
Under the current conditions, the deep sea benchmark HMS I/II 80:20 scrap prices in CFR terms have moved down by 3.04 percent week on week. The prices are now 3.23 percent lower month on month in the deep sea segment, with prices being in the range of $370-379/mt CFR.
US scrap prices for August are now expected to settle sideways to July across all grades, market insiders told SteelOrbis this week. Scrap insiders said bad economic data concerning interest rates, recent employment statistics and stock market declines had combined to overshadow recent calls for higher August scrap pricing. As real demand for finished steel remains muted, they said the focus for suppliers was shifting from reports of low inventories and solid export demand to maintaining cash flows as mills emerged to purchase their August scrap.
SteelOrbis has learned that the current price for Mexican domestic shredded scrap has increased by MXN 200/mt ($10/mt) over the past week to MXN 7,550/mt ($382/mt). Additionally, HMS I/II scrap prices have risen by MXN 300/mt ($15/mt) over the same period to MXN 5,600/mt ($283/mt).
The leading Japanese EAF steel producer Tokyo Steel announced another reduction in its scrap procurement prices on August 5, cutting them by JPY 1,000-2,500/mt for all assets. Tokyo Steel’s general range for H2 grade scrap settled at JPY 46,500-47,500/mt ($326-333/mt) depending on the mill, with the lower end down by JPY 1,000/mt, while the higher end, representing Utsunomiya in the Kanto area, fell by JPY 2,500/mt.
While Japanese yen-based prices have moved down in Japan’s Kanto scrap export tender compared to last month, the appreciation of the Japanese yen has meant that the dollar-based equivalent has increased. In the Kanto export tender, the highest bid was at JPY 47,956/mt FAS, JPY 4,212/mt lower than last month. The buyer was Bangladeshi. Despite the decline in the Japanese yen-based price, the dollar-based price increased from $323/mt to $327/mt CFR, taking into account the changes in the Japanese yen-US dollar exchange rate.
Due to the appreciation of the Japanese yen against the US dollar, Vietnamese producers are now facing higher scrap offer prices from Japan. SteelOrbis has learned that offers for Japanese H2 scrap to Vietnam are currently in the range of $365-373/mt CFR. Meanwhile, ex-Hong Kong 1/2 grade scrap deals to Vietnam have been concluded at around $350-352/mt CFR.
Earlier this week, Tokyo Bay FAS-based prices for H2 grade scrap were at JPY 47,000/mt ($320/mt). This level shows that FOB prices are at JPY 48,000/mt ($327/mt) for this grade.
Ex-US scrap offer prices have fallen in Taiwan, but ex-Japan scrap quotations shared with Taiwanese mills have moved up due to currency changes. Offers for ex-US HMS I/II (80:20) scrap in containers have declined to $345-350/mt CFR, from $349-362/mt CFR recorded last week. Japanese suppliers of H1/2 (50:50) scrap by bulk to Taiwan have increased their prices to $365-370/mt CFR.