Weekly round-up: Global ferrous scrap market witnesses mixed trends w-o-w, Turkiye remains active

The global ferrous scrap market exhibited mixed sentiments this week. Turkiye's market showed slight stability with limited activity due to public holidays, yet multiple deals from the US and Europe were noted. In India, sluggish trading was observed amid significant bid-offer disparities and declining rebar prices. Pakistan's market slowed during Muharram, leading to minimal activity and stable offers. Bangladesh saw increased scrap offers with reduced buyer interest due to liquidity issues and market closures. Japan experienced a significant drop in H2 scrap export offers due to subdued demand and yen appreciation. South Korea's market remained inactive, while Vietnam adopted a wait-and-see approach amid a domestic steel market slowdown. China's Shagang Steel has cut scrap purchase prices, reflecting weak market sentiments.

Turkiye: The Turkish imported ferrous scrap index remained stable with slight rise in mid-week and current indicative levels are at $389-390/t CFR, reflecting comparatively lesser activities in the market. At the start of the week, limited market activity was observed due to the Turkish Democracy and National Solidarity public holidays. Towards the weekend multiple deals from US and Europe were heard at $383-392/t price levels.

Market sources also said collection costs for HMS in the Benelux region were at a minimum Euro 320/t delivered to docks although the market remained stable amid holiday-induced quietude, with little fundamental changes noted, aside from these factors.

Meanwhile, attention shifted towards Chinese billet imports, which saw offers ranging between $500-520/t CFR for September-October shipments. This indicated that Turkish mills are considering alternative sourcing strategies amid stable scrap prices. These Chinese offers are attractive and pose a potential challenge to the demand for imported scrap.

The scrap-to-rebar spread was assessed at $189-190/t FOB, range-bound compared to the last week.

India: This week, India's imported scrap market remained sluggish as buyers continued to show disinterest due to significant bid-offer disparities. Indicative offers for shredded scrap hovered around $410-415/t CFR, but buyers were bidding lower at $400-405/t CFR, creating a $10-15/t gap that deterred suppliers too from offering in the market. Offers for HMS (80:20) from the UK/Europe and West Africa were at $385-395/t CFR.

Domestic market conditions also impacted demand, with rebar prices dropping to four-month lows, prompting buyers to adopt a need-based purchasing approach. Overall, trading activity was minimal as market participants avoided bulk procurement amidst ongoing price volatility.

Around 2,000 t of HMS (80:20), HMS-LMS bundle mix, and HMS-PNS mix scraps were booked from African, Yemen and UAE origins at around $380-390/t CFR Mundra.

Pakistan: Pakistan's imported scrap market was notably slow during the week due to the observance of Muharram, leading to minimal market activity and public holidays curtailing offers and bids. Indicative offers for shredded scrap from the UK/Europe remained steady at $425-430/t CFR Qasim, with limited interest from buyers. The domestic steel market was moderate, with buyers procuring on an as-needed basis, and local scrap prices rising due to shortages, assessed at PKR 150,000-160,000/t. Despite stable domestic rebar and billet prices, end-users limited purchasing power resulted in few major sales. As the market reopened post-Muharram, expectations of increased production costs and declining raw material inventory suggested potential price hikes in the near future.

Bangladesh: Imported ferrous scrap offers into Bangladesh increased by up to $2/t w-o-w for containerised scrap, while buyers in the Dhaka region showed less interest due to liquidity concerns. Bulk offers from the US and Japan were absent, as major players adopted a wait-and-watch approach, seeking better pricing before making procurements. In the mid-week, the market remained largely closed due to the observance of Muharram across the country.

As per market insiders, in Dhaka, several mills are up for sale, with some owners looking to sell plants along with the land. The industry is witnessing de-growth.

Workable levels for imported ferrous scrap in Bangladesh were at $410/t for Australian HMS (80:20), $420-422/t for UAE HMS 1 and PNS mix, $427-430/t for European shredded, and $420-425/t for US shredded.

While there is a high preference for Australian, Singapore, and Malaysian materials, the hike in freight rates has hindered significant bookings.

As a major steel mill representative, Bangladesh faces significant challenges. Student protests against quotas have led to blocked roads and railways, indirectly disrupting scrap and steel movements.

Japan: This week, Japanese H2 scrap export offers experienced a significant drop of around JPY 1,700/t due to subdued demand from key importing nations amid a slowdown in the domestic steel market and bid-offer gap, coupled with a sharp appreciation of the JPY against the US dollar.

According to BigMint's latest assessment, Japanese H2 scrap export offers are now at JPY 50,400/t ($322/t) FOB Tokyo Bay.

While the domestic supply of H2-grade steel in Japan is reported to be stable and adequate, shindachi and HS grades are in short supply. This shortage is attributed to sluggish construction activity and reduced automobile production in the country.

On the other hand, Tokyo Steel, the largest EAF steel producer, had reduced scrap purchase prices by JPY 500/t ($3/t) at its Tahara, Utsunomiya, and Okayama plants on 13 July. The new prices for H2 scrap were at JPY 51,500/t ($323/t) at Tahara, JPY 50,500/t ($317/t) at Okayama, and JPY 52,000/t ($327/t) at Utsunomiya. This price cut follows the recent Kanto tender, where a weaker JPY resulted in a $4/t decrease in the dollar-converted value. Moreover, Tokyo Steel's Kyushu Plant will reduce the price of all grades of steel scrap by JPY 500/t effective 20 July, 2024.

South Korea: In South Korea, there was no reported interest from sellers and buyers in the deep-sea market due to weak rebar demand and limited construction activities. However, South Korean steel giant, POSCO has decided to increase ferrous scrap procurement prices for certain grades by KRW 10,000/t ($7/t), effective from 17 July 2024.

This week, the combined ferrous scrap inventory of eight major South Korean steel mills reached 815,000 t, a slight 1% increase from the previous week's 807,000 t.

Vietnam: Offers for Japanese H2 scrap remained steady at $365-370/t CFR Vietnam. However, no bids were heard as market participants adopted a wait-and-see approach due to a slowdown in the domestic steel market. For instance, Vietnamese steel major, Formosa Ha Tinh (FHS) has rolled over HRC prices m-o-m for September 2024 shipments. Following the revision, prices of HRC (SAE1006, skin pass) are at $570-580/t CIF Ho Chi Minh City (HCMC), while non-skin pass coils are priced at $560-572/t CIF, depending on the volumes booked. The company has adjusted prices due to current weak market conditions and a substantial decrease in the prices of imported Chinese HRCs.

Meanwhile, offers for Hong Kong-origin 50:50 grade scrap were heard at $370/t CFR, but market participants agreed on a tradable level of $355/t CFR Vietnam.

China: Shagang Steel has reduced its ferrous scrap purchase prices by RMB 50/t ($7/t) to RMB 2,790/t ($384/t) including 13% VAT for HMS (6-10 mm), effective from 19 July. This marked the first price cut this month. Amid weak market sentiments, scrap sellers are focusing on lower stocks, while arrivals to steel mills rise.