Turkey’s import scrap market may have hit the bottom as of December 11, with the new deals surfacing in the market being closed at higher price levels. This has not come as a surprise to most market players, especially the sellers who have been resisting further price cuts or the prices in the most recent scrap deals. The gap between ex-US and ex-EU HMS I/II 80:20 scrap stood at $12.5/mt at the time. SteelOrbis considered this gap to be high, which meant European scrap prices would have room to increase to catch up with ex-US prices.
As anticipated by SteelOrbis, the large gap between ex-US and ex-EU prices in Turkey’s import scrap market could not be sustained and European scrap prices have increased quickly. On December 12, ex-Europe prices increased by $8.5/mt. The positive sentiment in Turkey’s import scrap market strengthened with each new deep sea scrap booking. Turkish mills have a long way to go to complete their purchases for January shipment, and so some market sources have started to expect ex-US HMS I/II 80:20 scrap prices to move above $350/mt CFR. Being a short month, December supports sellers’ sentiments given the limited trading time and the cold weather conditions.
As Turkish mills are making scrap inquiries in high numbers, particularly the long steel producers, deep sea scrap prices continue to increase with each deal. With several transaction surfacing the Turkish import scrap market today, December 13, deep sea scrap prices have continued their uptrend. SteelOrbis hears that European scrap offers are now at around $345-350/mt CFR, again pushing up ex-US offers from $350s/mt CFR to $355s/mt CFR. While sellers are believed to have enough tonnages to cover Turkey’s need for January shipments, they are also staying a step back from the market due to their expectations of higher price levels in the coming period. According to sources, “All will depend how sellers behave. If they can maintain their current attitude and wait, higher levels towards $360s/mt CFR for HMS I/II 80:20 may be possible. If suppliers like the current numbers, trading may accelerate, and price may stabilize.”
Under the current conditions, the deep sea benchmark HMS I/II 80:20 scrap prices in CFR terms have moved up by 2.52 percent week on week. The prices are now 4.55 percent lower month on month in the deep sea segment, with prices being in the range of $342-350/mt CFR.
US scrap prices for the month of December have settled sideways to down in the Ohio Valley and lower overall across the US Northeast region this week as new scrap demand from mills was reported to be minimal, scrap market insiders told SteelOrbis this week following the completion of the December buy-cycle. Market insiders reported Midwest mills initially sought $10-20/gt ($10-20/mt) discounts for December, even as suppliers did their best to hold their ground, despite continuing reports of weak mill order books coming into the new month.
US scrap prices in the Ohio Valley for December have settled sideways to down $10/gt, while prices in the US Northeast region for December have settled down $2-5/gt, both versus November values.
SteelOrbis has learned that the current price for Mexican domestic shredded scrap has decreased by MXN 100/mt ($5/mt) over the past week to MXN 6,150/mt ($298/mt). Additionally, HMS I/II scrap prices have declined by MXN 100/mt ($5/mt) to MXN 4,550/mt ($221/mt) over the same period.
Local scrap prices in Italy have fallen by about €5/mt this week, marking an overall decrease of €10-15/mt compared to end-of-November levels. According to market players, most steel mills are not interested in buying scrap due to the impending production halts.
One contact stated that he expects a stable market in January as production stops have been reduced to 10-20 days compared to the previously expected one month. Another source said he agreed, because the recent rise in deep sea scrap prices in Turkey may support Italian scrap prices again. According to a steel mill official, however, further declines are possible in the new year as there is no positive news on the finished steel side.
For the second month in a row, the Kanto scrap export tender in Japan has been closed with a price decline, as recorded on December 11. Downward pressure on Japanese scrap export offers persists in the market as the buyer regions are slowing their purchases ahead of the end of the year. In the Kanto export tender, the highest bid was at JPY 42,739/mt FAS, JPY 2,441/mt lower than last month. The dollar-based price has decreased from $293/mt to $280/mt FAS, taking exchange rate changes into account.
The leading Japanese EAF-based steel producer Tokyo Steel has announced its new prices for domestic scrap purchases, for the first time since late October. The producer has mostly kept its prices stable, except in the Kyushu region where it has cut its price slightly. The announcement came after the Kanto tender, in which the export price dropped by $13/mt on FAS basis. Tokyo Steel’s general range for H2 grade scrap remains stable at JPY 40,000-41,500/mt ($263-273/mt) depending on the mill. However, due to the appreciation of the Japanese yen against the US dollar, the dollar-based equivalent has moved up by $2/mt.
Meanwhile, Tokyo Bay FAS-based prices for H2 grade scrap are currently at JPY 42,500/mt ($279/mt). This level shows that FOB prices are now at JPY 43,500/mt ($288/mt) for this grade.
South Korean steel producer POSCO has kept its bids for Japanese scrap stable once again this week. A source at a major South Korean steelmaker commented, “Due to the lower HMR (hot metal ratio), they [POSCO] consumed lots of scrap rather than iron ore. That is why they still buy from Japan. Low stock [levels] made POSCO keep buying from Japan as much as possible.” POSCO has shared bids for Japanese HS grade scrap at JPY 50,000/mt ($326/mt) CFR, stable as compared to November 29, though, amid the fluctuation of the Japanese yen against the US dollar, dollar-based prices have dropped by $7/mt over this period.
POSCO also shared bids for Japanese shredded scrap at a stable level of JPY 48,000/mt ($313/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 41,000-42,000/mt FOB or $267-273/mt FOB.
While Taiwan’s import scrap market has continued to soften this week, market sources report that Japanese scrap suppliers have been struggling to keep up with the downward trend of ex-US scrap prices. Taiwanese producers finally concluded some rebar deals last week, but the tonnage is reported to have been limited. This week, offers for ex-US HMS I/II (80:20) scrap in containers have dropped by $5/mt on the upper end to $295-300/mt CFR. Some Taiwanese producers have concluded bookings for this grade at $290-297/mt CFR. The few offers shared for Japanese H1/2 (50:50) scrap bulk have moved up slightly from last week’s $310-325/mt CFR range to $320-323/mt CFR.
The import scrap market in Vietnam has gained some strength this week. Despite the decline observed in the Japan-based Kanto scrap export tender, the current offer levels from Japan are higher than Vietnamese buyers’ bids. Offers for Japanese H2 scrap to Vietnam have increased slightly over the past week from $333-335/mt CFR to $335/mt CFR. Ex-US bulk HMS I/II 80:20 scrap offer prices have remained stable over the past week at $360/mt CFR, with some sources reporting there is a tendency towards an upward push on prices in the market.