Weekly round-up: Global ferrous scrap prices continue to fall w-o-w

This week saw a continued downward trend in global ferrous scrap prices, particularly noticeable in South Asian markets. Exporters, including the US, were under pressure to offload inventory, leading to reduced offer levels following a downturn in domestic coil markets. Despite sluggish demand in key markets like India, Pakistan, and Bangladesh, demand remained relatively active, securing volumes in anticipation of Ramadan and subsequent holidays. Meanwhile, Japanese export offers remained steady, with limited interest from traditional import markets such as South Korea, Vietnam, and Taiwan. Additionally, domestic sales reportedly yielded higher returns compared to exports.

Turkiye: Turkish imported ferrous scrap market witnessed a sluggish start this week as mills hesitated on bookings amid slow rebar sales, leading to a halt in activity. Steel producers bid at $385-390/tonne (t) CFR for HMS (80:20), while exporters aimed higher at $405-410/t.

Mid-week, Turkish imported ferrous scrap prices dipped sharply due to negative sentiments in the overseas supplier market. Baltic and Benelux collection costs plummeted to Euro 340-342/t and Euro 330-332/t, respectively, down by Euro 10-12/t from last week.

BigMint's assessment for US-origin HMS (80:20) bulk scrap witnessed a significant drop to $395/t CFR, down by $17/t from the previous week. Similarly, the assessment for HMS (80:20) bulk from the US East Coast stood at $371/t FOB, down by $16/t w-o-w, supported by weaker domestic sentiments in the US scrap market.

Meanwhile, Turkish rebar export offers were reported at $600-604/t FOB, while short-sea prices softened due to pressure from mills. Short-sea scrap imports were assessed at $380/t CFR. Buyers aimed to lower prices, but limited scrap availability in Romania and Bulgaria could halt the downward trend soon.

The scrap-to-rebar spread widened to $205/t, considering that Turkish exported rebar was assessed at $600/t FOB Iskenderun.

India: At the outset of the week, the imported scrap market in India experienced a slight improvement, with buyers displaying revived interest in procuring scraps from Non-European sources. However, this trend waned as the Turkish market began to decline. Given Turkiye's prominent position as a scrap importer, other markets closely monitor its fluctuations. Furthermore, according to insights gathered by BigMint from industry insiders, downstream demand remained subdued, prompting steel mills to reduce production by 15-20% across various regions and they also withheld inventories until March. Consequently, buying interest remained limited.

On a weekly average basis, shredded scrap offers from Europe were evaluated at $415/t CFR, a decrease of $1/t compared to the preceding week's $416/t. Offers for HMS (80:20) remained steady at $391/t CFR.

Pakistan: Imported scrap buying in Pakistan remained moderate during the week, which can be attributed to a slowdown in the domestic steel market due to recent elections and uncertainty surrounding offers amid continuous declines. Weekly average offers for shredded scrap from Europe were evaluated at $430/t CFR, marking a $9/t decrease compared to the previous week's $439/t.

An official from a steel mill remarked, "The market is currently experiencing a slowdown. With the formation of the government pending, sales are invoiced slowly during this Assembly week, resulting in a sluggish pace and delayed payments."

Bangladesh: Bangladeshi steel mills increased deep-sea scrap procurement post- Turkish market price drop. Strategic move aligned with peak construction season. The recent decline allows for meeting immediate scrap needs before Ramadan, gearing up for post-Ramadan demand. Notable bulk deals from the US West Coast at $410/t CFR signal anticipation for increased steel demand in April. Challenges persist in obtaining letters of credit (LCs), impacting operational efficiency. Container offers from UK/Europe and Australia range from $410-430/t CFR.

Around 6,000 t containerised HMS (90:10), shredded, and PNS scrap were booked from various origins like Hong Kong, Australia, and the UAE at a range of $413-445/t.

Bangladesh raised electricity and gas prices to meet IMF loan conditions, aiming for economic stability. This move, along with an automated petroleum pricing formula, may affect essential commodity prices before Ramadan, sparking concerns about inflation.

Japan: Japan's H2 scrap export offers remained steadfast w-o-w, propelled by limited demand from key importing nations and robust domestic prices. Consequently, BigMint's weekly assessment of Japanese H2 scrap stabilised at JPY 52,100/t ($347/t) FOB Tokyo Bay, showing a marginal increase of JPY 100/t ($0.6/t) compared to the previous week's valuation of JPY 52,000/t ($345/t) FOB.

Tokyo Steel, a leading Japanese mill, has opted to raise its domestic ferrous scrap purchase prices by JPY 2,000/t ($13/t) from 1 March, 2024. H2 scrap prices at Tahara and Utsunomiya plants held steady, while at Takamatsu Steel Centre, H2 scrap increased to about JPY 52,000/t ($347/t), up JPY 2,000/t.

Japan's ferrous scrap exports totalled 0.44 million tonnes (mnt) in January 2024, marking a 24% decrease from the 0.58 mnt reported in December. Similarly, compared to January 2023's figure of 0.56 mnt, exports fell by 21% on an annualised basis.

Vietnam: Japan's H2 scrap export offer held firm at $388-395/t CFR Vietnam, while bids from buyers were evaluated at $385/t CFR. Consequently, no trades were reported in the market.

South Korea: South Korean steel mills displayed a lack of enthusiasm towards procuring scraps from the seaborne market, finding domestic scrap prices more favourable.

Furthermore, the ferrous scrap inventory of eight major South Korean steel mills stood at 832,000 t by the last week of February, marking a notable increase of approximately 4% compared to the previous week's figure of 798,000 t. Steel scrap inventories, which had halted their increase last week, resumed their upward trajectory this week. The resurgence in inventory levels is believed to stem from the relaxation of inventory control measures following the completion of major maintenance activities.