Weekly round-up: Global ferrous scrap market gains amid improved sentiment following Chinese stimulus announcement

This week, the global scrap market exhibited a mix of resilience and caution, as various regions navigated unique challenges and opportunities. Turkiye's imported scrap prices surged, fuelled by strong domestic rebar demand and optimistic market sentiment, while India gradually ramped up its inquiries in anticipation of increased steel demand ahead of the festive season. In contrast, Pakistan and Bangladesh grappled with sluggish market conditions, largely driven by weak steel sales and economic uncertainty, prompting buyers to tread carefully. Meanwhile, Vietnam and South Korea faced a muted appetite for Japanese scrap, although expectations of improved activity lingered. In the US, robust demand from Turkish steelmakers resulted in a sharp rise in the ferrous scrap export index, reflecting a complex interplay of local and global market influences. Overall, the global ferrous scrap market gained amid improved sentiment following Chinese stimulus announcement.

Turkiye: Throughout the week, the Turkish imported scrap market saw a steady uptrend, driven by bullish sentiment, strong rebar demand, and increasing Chinese iron ore prices. US-origin HMS (80:20) scrap rose from $368/t CFR to $382/t CFR, as mills actively sought scrap to meet robust domestic rebar sales. Sellers held back, expecting even higher prices, partly due to US port strikes and tight supply.

Baltic and US-origin HMS prices reached $385-388/t CFR, though mills resisted further increases. Strong mill demand and the global price surge, influenced by China's market, contributed to an optimistic outlook for the coming weeks.

India: In India, demand for imported scrap increased gradually due to pent-up demand and improved domestic steel market sentiment. Market participants observed a surge in inquiries, as buyers sought to restock ahead of the festive season, anticipating stronger steel demand. A trader commented, "Demand has improved, with buyers inquiring actively. The market is up due to rising iron ore and sponge prices, but I believe workable levels will stay at $400-405/t."

On weekly average, shredded scrap offers from the US and UK/Europe rose by $10-12/t to $395-400/t CFR Nhava Sheva, while HMS (80:20) offers from UK/Europe increased by $6/t to $375/t.

Approximately 12,000-13,000 t of mixed scraps were booked during the week from various regions, with HMS 80:20 and HMS 1 accounting for around 10,000 t in the range of $378-392/t CFR, while shredded scrap was secured at $400-403/t CFR.

Pakistan: Pakistan's imported scrap market remained sluggish throughout the week due to weak domestic steel sales and liquidity challenges. Steel mills operated at reduced capacities of around 40-60%, with many companies underselling inventory to maintain cash flow. Buyers exercised caution, limiting purchases to immediate needs, while delayed payments and shrinking profit margins added to the uncertainty. Market participants observed a rise in global scrap offers, driven by bullish sentiment, yet Pakistani mills were hesitant to procure more due to slow rebar sales and minimal production.

Notably, approximately 2,000-3,000 t of shredded scraps were booked from the UK/Europe and the UAE around $400-405/t CFR Qasim.

Despite the IMF's $7-billion bailout offering some economic relief, market sentiment remained cautious, with hopes pinned on government measures to boost production and improve liquidity in the coming weeks.

On a weekly average basis, shredded scrap offers from the UK/Europe jumped by $10/t to $401/t CFR Qasim.

Bangladesh: Bangladesh's imported scrap market remained subdued throughout the week due to weak construction activity, economic instability, and political uncertainties, which dampened buyer interest, especially from rebar sellers and steel suppliers involved in government projects. Despite global scrap offers rising, buyers maintained a cautious approach, limiting purchases as local mills held sufficient inventory.

On a weekly average basis, shredded scrap offers from the UK/Europe edged up by $5/t to $404/t CFR Chattogram, while HMS (80:20) inched up by $4/t to $393/t CFR.

Additionally, the market faced challenges with trade routes, while the impact of delayed IMF support and ongoing economic recovery added to market hesitancy.

A bulk scrap vessel from Japan, carrying 10,000 t of busheling scrap, was reportedly booked at $405/t CFR Chattogram.

Vietnam: Demand for Japanese scrap in Vietnam remained sluggish, with H2 offers rising to $325-330/t CFR Vietnam, but no significant deals were concluded. Market participants expressed cautious optimism, anticipating a potential pickup in restocking activity as the year-end approached. This sentiment was bolstered by rising Chinese billet prices and positive domestic futures sentiment in China. However, many buyers continued to monitor the market from the sidelines.

Vietnam's domestic scrap market faced tight supply due to recent typhoons and floods, which prompted mills to seek more seaborne material. Local scrap prices of H2-equivalent grades slightly increased, with northern prices moving to VND 9,100-9,700/t ($369-$393/t) and southern prices rising to VND 8,500/t.

South Korea: Demand for Japanese scrap in South Korea was muted, with H2 offer activity remaining low due to quiet market conditions. Despite stable prices of H2-equivalent Light A grade scrap at KRW 395,000-410,000/t ($299-310/t) and Heavy A grade at KRW 425,000-430,000/t, several public holidays on 3 and 9 October contributed to a slowdown in trading activity.

Japan: Japanese H2 scrap export offers rebounded this week after a series of declines since mid-July, though demand from key importing nations remained sluggish. Suppliers in Japan increased their price tags due to rising Chinese billet prices and optimistic market sentiment following recent stimulus measures in China. While buyers are taking a cautious approach and monitoring the market, Japanese suppliers are not hurrying to make offers for November shipments, as they anticipate stronger demand with China's return from the holidays.

According to BigMint's latest assessment Japanese H2 scrap export offers stood at JPY 41,000/tonne (t) ($280/t) FOB Tokyo Bay, up by JPY 700/t ($5/t) from JPY 40,300/t ($275/t) FOB in the previous week.

US: The US ferrous scrap export index increased sharply due to firm offers and better inquiries from Turkish steelmakers for November 2024 shipments, as their rebar sales in the domestic and export markets continued to rise supported by buyer preference for high-priced ferrous scrap from the US.