Export market scenario-
Turkiye takes limited US scrap vessels: Around one US east coast bulk scrap cargo has been booked in the second week of July so far as compared to four to five in the previous week.
The Turkish government recently announced a 30% rise in industrial usage and this change is expected to impact Turkish steel producers, already facing resilient scrap prices and sluggish demand. The pressure on producers is likely to persist unless prices in the US recover.
Turkish imported HMS (80:20) scrap from the US remained at the $388-390/t range CFR for the last two weeks.
Asian buyers active in US bulk scrap: US-origin bulk scrap offers continued to decline for Vietnam and Bangladesh by $3-4/t w-o-w keeping buyers more interested in restocking materials for the next production cycle.
Sources indicated that major buyers from Dhaka and Chattogram are likely to book some cargo from the US by the end of this month due to favourable prices.
The market is seeing increased activity before the monsoon intensifies, particularly with heightened interest in US bulk scrap as buyer-seller price expectations converge. According to a buyer source, a bulk vessel booked from the US in May has recently arrived due to delays in processing letters of credit (LCs).
Assessment trend
- BigMint's assessment for HMS(80:20) bulk, FOB east coast decreased by $2/t w-o-w to $362/t on Friday, from $364/t a week ago.
- BigMint's assessment for shredded bulk, FOB east coast decreased by $2/t w-o-w to $382/t on Friday, from $384/t a week ago.
Brent crude oil has been trading between $75-$90 per barrel since late 2022. Organisation of the Petroleum Exporting Countries (OPEC+) production cuts have kept prices stable, preventing significant surges despite ample spare capacity and an uncertain demand.
OPEC+ cuts: These have created a price floor, with prices unlikely to drop below $80.
Spare capacity: OPEC+ has 5.8 million barrels per day in spare capacity, mainly from Saudi Arabia, the UAE, and Iraq.
Demand issues: Stagnant demand in the west and China, with recent declines in Chinese demand.
Sanctions on Russia: Limited impact due to new buyers in China and India.
While stable brent prices may benefit the steel industry, the direct impact on US ferrous scrap export prices is expected to be minimal.
Outlook: Reports indicate that regional mills and several large sellers are holding significant scrap inventories, looking ahead to the third quarter, renewed demand suggests that stocks may deplete quickly once demand returns and export prices will continue to remain firm.