Are High Global Scrap Prices Deterring Trades?
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After remaining silent in the last week major scrap suppliers returned from New Year holidays in the global scrap markets this week and offers also have remained on the higher side. However, no significant number of trades were reported at quoted high offers. Most of the importers in Bangladesh, India and Turkey seems to resist concluding deals at such high offers.
In Bangladesh, scrap importers remained away from booking amid very high offers again in this week. Latest imported scrap offers from major suppliers moved further by USD 5-7/MT in Bangladesh. Offers for Shredded 211 from USA and Australia are being quoted above USD 400/MT, CFR Chittagong. Offers for containerized HMS 1&2(80:20) from US are around USD 365-370/MT, CFR.
Most of the market participants are of the view that importers from Bangladesh are willing to buy scrap but many of them are losing interest in booking cargoes at such high prices and are eyeing and waiting for fall in offers. Presently major steelmakers in Bangladesh are preferring domestic scrap which is being offered around BDT 35,000/MT and thus cheaper and quickly available than imported scrap.
In Turkey, after remaining less active in last two weeks importers were expected to return into to the market actively for remaining Feb'18 shipments however, Turkish importers remain less working with one or two trades confirmed in the market this week. In last trade reported, an importer booked 24,000 MT HMS 1&2(80:20) at USD 374/MT, 5000 MT Bonus scrap at USD 384/MT and 1000 MT Rail scrap at USD 389/MT respectively. However offers for US origin HMS (80:20) are assessed on the higher side at USD 380-385/MT, CFR.
What could be the reasons behind slight resistance in scrap purchase at high quoted offers?
1. Decline in Chinese billet prices - Amid prevailing strong winter season, construction activities in China have slowed down resulting in the decline in rebar & billet prices. Chinese billet prices in the domestic market are assessed at RMB 3,580/MT, including 17% VAT which was trading at RMB 3,680/MT a week ago. Following this, Chinese billet export offers have also come down and are heard around USD 520-530/MT, FoB
2. Domestic billet prices in India have moved down - Domestic billet prices in India have come down sharply by around INR 1000/MT against last week. Billet prices are assessed today at around INR 34,300/MT, Ex Mumbai.
3. Limited trades reported in global billet market - CIS billet export offers are stable at USD 515/MT, FoB Black Sea and witnessed very limited trades.
