Amid a relatively slow week in terms of scrap bookings, Turkey has successfully achieved lower deep sea scrap prices. Prices have declined sharply in deals from the EU and market sources say that the negative mood in the market is gaining ground.
Following an ex-Netherlands booking yesterday, October 24, an ex-France deal has been concluded by a producer in Izmir with the HMS I/II 80:20 scrap price standing at $360/mt CFR, $2/mt higher than the price in the previous transaction from the EU.
Additionally, an ex-US scrap deal has been signed by a Marmara-based producer for HMS I/II 80:20 scrap at $364/mt CFR, shredded and bonus grades at $384/mt CFR. As a reasult, ex-US scrap prices declined by $2/mt, lower than the previously anticipated levels at $365/mt CFR.
One seller said that the current price level for ex-EU scrap may represent the bottom, adding, “Remember, the last time, these levels became the bottom.” Another seller disagreed, pointing to the softness of import billet offers, stating, “Who can say billet prices will remain firm. They have been moving down for some time and I cannot see a bottom yet.” As SteelOrbis mentioned previously, this week most ex-China billet offers are at $500/mt CFR and down to $497-498/mt CFR in some cases, while earlier the offers were at a minimum of $525/mt CFR as an indicative level. Sources expect that the maximum price that Turkey would pay for ex-China billet is around $480-490/mt CFR currently. An official at a major Turkish mill said there are still several scrap offers to Turkey, adding, “There are offers seeking buyers indeed, though the price levels are vague. We expect more deals to be signed for November shipment, even some this week.”
Under the current conditions, the deep sea benchmark HMS I/II 80:20 scrap prices in CFR terms have moved down by 2.96 percent week on week. The prices are now 0.41 percent lower month on month in the deep sea segment, with prices being in the range of $358-364/mt CFR.
US domestic scrap pricing for the month of November is viewed as trending strong sideways to as much as $30/gt higher, as mills’ buying activities are expected to be improved since more idled facilities will have completed annual maintenance programs by start of the November buy-cycle, even as scrap inventories on the ground are beginning to improve given the recent October scrap price increases, as market insiders told SteelOrbis this week. “I believe we are looking at plus $20-30/gt in Chicago,” said one Midwest scrap market insider commenting on the November outlook, adding, “Twenty dollars (per gt) to make up for the sideways move last month, plus another $10/gt.”
Even though the local Italian scrap market has mostly remained stable in the past week in line with market expectations, some mills have unexpectedly increased their scrap purchase prices by €10-15/mt. According to some market participants, these are isolated cases related to the contingent needs of the mills in question and there should not be a general increase in scrap prices. Other traders, on the other hand, think that this is a clear sign of an increase that is likely to materialize in the November contracts.
The situation in the local German scrap market has not changed much in terms of prices in October compared to the previous month, although all grades registered some slight declines. With scrap procurement prices dropping and finished steel prices on the low side, German producers - who were already struggling with sales - decided to cut production rates in order to maintain decent margins. According to the latest data provided by the Bundesvereinigung Deutscher Stahlrecycling-und Entsorgungsunternehmen e.V, in the first 20 days of October, scrap prices in Germany moved down by €0.1-9.0/mt month on month.
Producers, on the other hand, are planning shutdowns for the All Saints’ holiday (November 1) and several will halt production for at least a week to cope with the difficulties in the finished steel market. “We will wait until the first week of November and try to resist the demands for an increase from scrap dealers,” said an official at one steel mill.
South Korean steelmaker POSCO has issued bids for Japanese scrap again, for the fifth consecutive week. POSCO has shared bids for Japanese HS grade scrap at JPY 51,000/mt ($336/mt) CFR, stable as compared to last week. This time, POSCO has shared bids for Japanese shredded scrap at JPY 49,000/mt ($322/mt) CFR. Considering the gap between ex-Japan shredded and H2 scrap prices at around JPY 3,000-4,000/mt, this means indications for ex-Japan H2 prices for South Korea are at JPY 42,000-43,000/mt FOB or $276-283/mt FOB.
In the current week, Tokyo Bay FAS-based prices for H2 grade scrap were at JPY 42,500/mt ($280/mt). This level shows that FOB prices are at JPY 43,500/mt ($286/mt) for this grade. Both prices have remained stable week on week.
Following the uptrend seen in the market during the previous two weeks, Taiwanese producers have cut their import scrap purchase prices over the past week. Offers for ex-US HMS I/II (80:20) scrap in containers have remained stable in the range of $333-335/mt CFR. There was more activity in terms of offers for Japanese H1/2 (50:50) scrap bulk this week in Taiwan, than there was in terms of ex-US offers, market sources reported.
Over the past two weeks, import scrap offer prices to Vietnam moved up first but failed to maintain their strength and started to soften this week as Vietnamese buyers were cautious and had been resisting the higher offers. Prices for Japanese H2 scrap to Vietnam have moved up by $5/mt over the past week to $340-345/mt CFR. Ex-US bulk HMS I/II 80:20 scrap offer prices are currently at $380/mt CFR, $10/mt higher as compared to October 11.
The situation in the local German scrap market has not changed much in terms of prices in October compared to the previous month, although all grades registered some slight declines.