Weekly round-up: Global ferrous scrap market sees downtrend except India, Turkiye

This week, the global ferrous scrap market exhibited a downward trend. However, in the South Asian region, among the three countries assessed by BigMint- India, Pakistan, and Bangladesh - Indian buyers showed relatively better demand although the pace was moderate due to expectations of a softening in offers. Buyers needing immediate supply were actively procuring small quantities from the seaborne market. In contrast, Pakistani and Bangladeshi markets were slow due to a sluggish steel market, with a preference for short transit deals.

Meanwhile, Japanese H2 scrap export offers declined following the recent price cut by Tokyo Steel, the leading EAF steel producer. This adjustment was influenced by the unexpected shutdown of its electric arc furnace at the Tahara plant due to damage to ancillary equipment.

Turkiye: Turkiye's import ferrous scrap prices remained stable as mills restocked at steady rates. Mid-week negotiations showed most importers delaying new deals due to weak steel demand. Turkish mills booked 9-10 cargoes this week, primarily from Europe and the US, at $372-380/t CFR, totalling over 30 bulk cargoes during the month.

The sluggish export market has pressured scrap prices downward. A European supplier noted HMS collection costs at euro 310-320 have been stable, with future bookings expected at $370-375/t, potentially dropping below $370/t if exporters can't find buyers.

BigMint's assessment of US-origin HMS (80:20) bulk scrap stood at $380/t CFR, stable w-o-w, while HMS (80:20) from the US east coast was $357/t FOB, up $1/t.

Turkish rebar export prices were $578-580/t FOB, with a scrap-to-rebar spread of $198-200/t. Short-sea scrap from Romania and Bulgaria were $358-360/t CFR.

India: Throughout the week in India, the market for imported scrap saw moderate activity, with buyers purchasing small quantities to meet immediate needs due to the anticipation of a drop in offers. Additionally, some regions experienced bid-offer disparities. On average, shredded scrap offers from Europe decreased by $2/t to $416/t CFR, while offers from the US remained stable at $414/t CFR.

Notably, approximately 6,000 t of shredded scrap were booked from the US, UK, and Australia at prices ranging from $415-418/t CFR. Furthermore, 4,500 t of HMS (80:20) were booked from African origins at around $395-410/t CFR, and about 2,000 t of HMS (90:10) scrap were booked from Chile at around $398-400/t CFR.

A steel mill official said, "For imports, we bought small quantities and mostly took a wait-and-watch approach as we expected prices to drop." Another steel mill official commented, "Scrap supply was tight in the domestic market, primarily due to tight cash flows amidst elections. We are waiting for import offers to drop before booking more imported scrap. Domestic buying continues regularly, with production levels around 90%."

Pakistan: Pakistani steel mills showed very minimal interest in imported scrap due to an unstable domestic steel market. Notably, on 28 and 30 May, a few steel mills, including Naveena, Agha, and Faizan, closed sales of grade 60 rebars due to a shortage of raw material and were considering a price hike of around PKR 4,000-6,000/t despite low demand for finished steel.

No major deals were reported during the week. Average offers for shredded scrap from the UK and Europe were assessed at $418/t CFR, remaining range-bound w-o-w.

Bangladesh: Bangladeshi buyers are moderately interested in imported scrap, with indicative offers for shredded scrap from the UK/Europe at $420-425/t CFR Chattogram and HMS (80:20) at $400-405/t CFR. A local steel mill reportedly booked a bulk cargo from Japan, comprising 10,000-12,000 t of HMS (80:20) at $400-405/t CFR.

Buyers are favouring short transit scraps from Singapore, Malaysia, Hong Kong, and Australia due to higher freight rates from the UK/Europe. Market activities slowed due to adverse weather, with offers for EU shredded scrap at $420-425/t CFR and HMS (80:20) at $395-405/t CFR. US shredded scrap offers at $425/t were deemed unviable. PNS scraps from Hong Kong were offered at $450/t CFR.

The US shredded scrap at $425/t is considered non-viable, and high freight rates hinder prospects from the UK/EU. Interest focuses on materials from Singapore, Malaysia, and Hong Kong for their shorter transit times. While letters of credit (LCs) processing have improved, it still takes 15-20 days, extending to a month for volumes of 2,000 t.

Bangladeshi steelmakers continued regular bookings from Far East Asia and Australia, with some offers from the UAE.

Japan: This week, Japanese H2 scrap export offers saw a notable decline after Tokyo Steel announced a price cut at its Tahara plant. Tokyo Steel Manufacturing unexpectedly shut down its electric arc furnace at the Tahara plant due to damage to ancillary equipment. This incident preceded the reduction in bid prices for all grades of scrap at the Tahara facility.

As a result, BigMint's weekly Japanese H2 scrap export offers stood at JPY 50,700/t ($323/t) FOB Tokyo Bay, down by JPY 1,200/t ($8/t) from JPY 51,900/t ($331/t) FOB the previous week.

South Korea: South Korean mills continued to prefer domestic scrap over imported scrap due to its cost-effectiveness. The market is not expected to recover until the end of summer. H2-equivalent Light A grade scrap remained steady at KRW 395,000/t ($287/t), while Heavy A grade stayed at KRW 425,000/t ($307/t).

This week, the combined ferrous scrap inventory of eight major South Korean steel mills reached 768,000 t, a 2% decrease from the previous week's 799,000 t. The inventory reduction was more pronounced in the central region compared to the south, where news of the price cut had been announced.

Vietnam: Vietnamese buyers showed little interest even before Tokyo Steel's price cut announcement due to weak finished steel demand. Domestic scrap prices in Vietnam declined amid this low demand and strong competition faced by electric arc furnaces (EAFs) against blast furnaces (BFs). In northern Vietnam, Domestic Type 1 or H2-equivalent 3-6 mm scrap prices fell by VND 100/kg ($4/t) to VND 9,500-9,600/kg ($372-376/t), while southern prices for the same grade dropped to VND 8,350-8,650/kg($327-340/t).

As per a mill source, steel demand is still weak, and the rainy season is starting soon. Low iron and coke prices give blast furnaces a production cost advantage, so EAFs cannot compete, thus scrap demand is low.

Offers of H2 scrap from Japan to Vietnam dropped by $2-3/t to $372-375/t CFR, while buyers' bids were assessed at $365/t CFR Vietnam.