Global View on Scrap: Turkey’s import scrap prices still falling, Asia remains soft despite stable expectations
Turkey is still exerting significant pressure on deep sea and short sea scrap prices, with a new bottom seen in each deal. Several market sources report that the number of offers shared with Turkish mills is on the high side. The general sentiment in Turkey’s import scrap market remains negative.
With ex-US scrap sellers’ resistance broken towards the end of the week, the total week-on-week decline in the deep sea HMS I/II 80:20 scrap segment has reached $7/mt on average. Market sources mostly agree that there is currently significant downward pressure on deep sea scrap prices, while most players believe that December will not be very different from November. “There are too many cargoes available for December and January shipments, more than we anticipated earlier this month. There is not sufficient demand received from producers for January shipments,” a seller said. “Turkey has not bought low tonnages over the past two months. I believe a total of 60-65 deep sea cargoes were bought by Turkey in this period. There are also previous billet and slab orders. Turkish producers are in no rush,” a source added. Domestic fundamentals in the scrap supplying regions are also negative, market sources agree. Expectations for the local US scrap market have changed from sideways to soft sideways. The European domestic scrap market is set to decline in December amid a lack of demand. The lack of finished steel sales is one of the main topics of conversations both in the EU and Turkey. The appreciating US dollar is also exerting pressure on all commodity prices. Some Turkish long steel producers report that nothing is happening on the sales side.
Under the current conditions, the deep sea benchmark HMS I/II 80:20 scrap prices in CFR terms have moved down by 2.02 percent week on week. The prices are now 5.96 percent lower month on month in the deep sea segment, with prices being in the range of $337-342/mt CFR.
US scrap markets for December are now seen sideways to soft sideways to November settled pricing, a bit weaker than was heard seven days ago, as domestic mill demand for scrap is reported low, despite continued reports of tight inventory levels at local collection yards, market insiders told SteelOrbis this week. “Any hope of sideways right now would be great,” said another Midwest scrap insider, commenting on the weekly change from previous the December scrap outlook. “The markets have been wishy-washy since the week before last. Cash is king right now, and order books (at mills) remain soft, and the only redeeming thing is scrap (in-flows) may be less than demand.”
SteelOrbis has learned that the current price for Mexican domestic shredded scrap has decreased by MXN 350/mt ($17/mt) over the past week to MXN 6,350/mt ($303/mt). Additionally, HMS I/II scrap prices have declined by MXN 200/mt ($10/mt) to MXN 4,950/mt ($236/mt) over the same period.
Over the past week, some Italian mills have lowered their scrap purchase prices by €5-10/mt. The drop, according to sources, is linked to the shortage of new orders and sales of finished steel that has been observed for months and to the negative outlook for the new year, coupled with the negative trend seen in all international markets.
According to trade sources, though, there is still a substantial shortage of available raw material. Indeed, some contacts speak of a “standstill” rather than actual decreases, as the duration of the stoppages has already been reduced by some producers.
In Spain, the local scrap market is following the international downward trend, and this week a major steel mill has announced €10/mt reductions in its scrap purchase prices as demand for scrap from producers is extremely low. According to market participants, further declines cannot be ruled out if import prices in Turkey continue to fall in the coming contracts.
Over the past week, South Korean steel producer POSCO has kept its bids for Japanese scrap stable. Following the capacity utilization cuts announced by two major South Korean producers, there is significant downward pressure on the domestic scrap market. Over the past year, the share of South Korean mills’ purchases of scrap from their local market has occasionally reached 90 percent. They imported 1.5 million mt of scrap in the January-August period, 73 percent of it from Japan. While Japan’s share has not changed year on year, estimations indicate that South Korea’s import scrap tonnages have dropped by more than 50 percent this year. POSCO has also shared bids for Japanese shredded scrap, stable at JPY 48,000/mt ($320/mt) CFR. This means indications for ex-Japan H2 prices for South Korea are at JPY 41,000-42,000/mt FOB or $273-380/mt FOB.
Taiwan’s import scrap market has continued to move down over the past week, though the domestic market has held its ground. Market sources say they believe import scrap quotations, especially from the US, may have hit the bottom since the winter holiday season in the US is approaching. This week, offers for ex-US HMS I/II (80:20) scrap in containers have continued to drop unabated, declining by $8-15/mt to $302-313/mt CFR. During the past week, the offer range for Japanese H1/2 (50:50) scrap bulk has moved down from last week’s $320-328/mt CFR range to $316-323/mt CFR.
Due to the lack of scrap demand, import scrap prices in Vietnam have remained relatively stable over the past week. Market sources report that sluggish steel sales and dropping international scrap prices are also contributing to the increased uncertainty. Offers for Japanese H2 scrap to Vietnam have remained stable over the past week at $335-340/mt CFR. Ex-US bulk HMS I/II 80:20 scrap offer prices are still at $360-365/mt CFR.