Weekly round-up: Global ferrous scrap market struggles with weak demand, falling prices

The global ferrous scrap markets encountered significant challenges in the week ending 9 August 2024, marked by limited demand, falling prices, and cautious buyer behaviour across several regions. Key trends and updates are as follows:

Turkiye: Turkish ferrous scrap prices experienced a sharp decline mid-week as Turkish buyers secured a European bulk vessel at $376/t CFR. Turkish mills, having been inactive for weeks, found US-origin HMS (80:20) offers at $390/t CFR unworkable. Two bulk cargoes from the US were reported: HMS (90:10) at $381/t CFR and shredded/PNS scraps at $396/t CFR. Another deal concluded at $383/t for HMS (90:10) and $398/t for PNS scraps. BigMint's assessment for US-origin HMS (80:20) fell to $378-380/t CFR, down $6-8/t w-o-w, while US East Coast bulk HMS (80:20) dropped to $352-353/t FOB. Market sentiment remained weak, with mills anticipating further price declines due to high recycler inventories. EU-origin HMS (80:20) offers are around $375-378/t CFR, with aggressive offers from Baltic recyclers at $380-382/t CFR. Turkish mills are hesitant to pay above $380/t CFR and are contemplating production cuts due to sluggish rebar demand.

India: India's imported scrap market remained sluggish throughout the week, characterised by limited buyer interest and a significant gap between offers and bids. Indicative offers for shredded scrap from the UK/Europe and the US hovered around $410-415/t CFR Nhava Sheva, while buyers sought lower prices of $400-405/t CFR. Similarly, HMS (80:20) offers were quoted at $380-390/t CFR, with buyers looking for lower prices. Despite a few distressed container sales for shredded scrap in the northern region, overall demand remained weak. Market participants are expecting a potential demand rebound post-monsoon. However, ongoing rains and sluggish steel demand kept the market under pressure, with production levels reduced to around 50-60%. Even when inquiries arose, they were not at workable levels, underscoring the bearish sentiment in India's imported scrap market.

Pakistan: Pakistan's imported scrap market saw limited demand due to financial constraints, subdued domestic steel demand, and expectations of further price declines. Indicative offers for shredded scrap from the UK/Europe were consistently assessed at $418-422/t CFR Qasim, with US-origin scrap slightly lower at $415/t CFR. Buyers remained hesitant, anticipating more favourable pricing. The domestic steel market faced challenges such as payment delays, reduced margins, and a seasonal slowdown exacerbated by recent heavy rains. Steel mills struggled with cash flow issues, leading to reduced production levels to around 60%. The absence of new government projects and rising operational costs further pressured the industry, leading mills to refrain from booking new scrap and focus on distress sales.

Bangladesh: Bangladeshi buyers have been cautious due to political instability, though recent developments indicate improving stability with the formation of an interim government. Bookings resumed mid-week with inquiries from Australia, the US, Chile, and New Zealand. Activity is expected to pick up as the interim government stabilises. A Bangladeshi mill secured the August Kanto scrap tender for 15,000 t of H2 scrap at JPY 47,956/t ($326/t) FAS, down by JPY 4,212/t ($27/t) from July's price. BigMint's data showed a 14% m-o-m increase in bulk ferrous scrap imports to Bangladesh in July 2024, totaling 396,639 t, up from 347,268 t in June. This marks an 8% y-o-y rise from July 2023.

Japan: Japanese H2 scrap export offers continued to decline for the fourth consecutive week. BigMint's weekly H2 scrap export offers were reported at JPY 47,500/t ($323/t) FOB Tokyo Bay, a decrease of JPY 1,400/t ($10/t) from the previous week. The drop is attributed to currency volatility and reduced buyer interest during the holiday season. In the latest Kanto export tender, bids fell in JPY terms, though dollar terms increased by $3/t compared to July. About 15,000 t of scrap were awarded to a Bangladeshi mill at JPY 47,956/t ($326/t) FAS, down from July's price. Additionally, Tokyo Steel announced reductions in its scrap procurement prices across all grades effective 6 August 2024, cutting prices by JPY 2,000/t ($14/t) at its Tahara plant, JPY 2,500/t ($17/t) at Utsunomiya, and JPY 1,000/t ($7/t) at Okayama.

Vietnam: Vietnamese buyers showed limited interest in Japanese scrap due to a significant bid-offer disparity. They opted for more cost-effective regional sources from Hong Kong, South Korea, and Russia. Offers for Japanese H2 scrap were assessed at $365-370/t CFR Vietnam, with bids around $360/t CFR. Only a few Japanese suppliers have been active recently, likely due to the upcoming summer holidays and expectations of further recovery in the JPY.

South Korea: South Korean steel mills demonstrated limited interest in Japanese scrap, focusing instead on selling billets in the seaborne market. The combined ferrous scrap inventory of eight major South Korean steel mills fell to 695,000 t, an 11% decline from the previous week's 785,000 t. This is the first time since mid-January that inventory levels have fallen below 700,000 t. The decline is attributed to seasonal factors, factory shutdowns, and reduced production. Some steelmakers are attempting to secure supplies through special and contract purchases, though it remains uncertain whether inventory levels will rise following this price adjustment.

China: Shagang Steel reduced ferrous scrap prices by RMB 60/t ($8/t) from 9 August 2024, with HMS (6-10 mm) now priced at RMB 2,530/t ($353/t) including 13% VAT. This is the second price drop this month due to weakening finished steel prices and reduced demand from major mills. Domestic steelmakers have also announced unscheduled maintenance to manage rebar surplus.