Weekly round-up: Global ferrous scrap prices see mixed trend

This week, the global ferrous scrap markets showed contrasting trends. Turkiye saw a rise in import prices due to improved market sentiments and tighter supply, with a narrowing gap between short-sea and deep-sea scrap. In India, prices remained under pressure due to weak demand and market uncertainty, compounded by a forthcoming port strike. Pakistan experienced a slight increase in scrap offers due to higher supplier offers despite cautious buying and liquidity issues. Bangladesh's market was subdued following severe flooding, which impacted construction and scrap demand.

Japanese H2 scrap export offers have dropped for the seventh week in a row due to fluctuating currency rates, weakened import demand from traditional markets, and the availability of cost-effective billets from China, South Korea, and Russia.

Turkiye: The Turkish imported scrap market saw a gradual rise in prices this week, driven by improving market sentiments and tighter supply. US-origin HMS (80:20) edged up to $365/tonne (t) CFR; short-sea scrap prices also increased, narrowing the gap with deep-sea scrap. Sellers held back on deals, anticipating further price hikes due to limited availability and high collection costs in Europe.

Despite Turkish mills' efforts to push prices down, the market remained firm, supported by a recovery in Chinese billet prices and a stronger euro. The belief that prices had bottomed out led to a more confident seller's market, with sellers holding out for higher prices as demand showed signs of picking up.

India: India's imported scrap market experienced a challenging and bearish week, characterised by sluggish demand and hesitant buyers. Shredded scrap offers fluctuated between $385/t and 395/t CFR Nhava Sheva, but buyers were reluctant, seeking prices below $385/t. HMS (80:20) offers from the UK/Europe and West Africa ranged from $365/t to 375/t CFR, with buyers targeting even lower levels, reflecting a lack of urgency in the market.

The downturn was driven by several factors, including weak steel demand, more attractive domestic scrap options, and widespread expectations of further price declines. Buyers were cautious, drawing parallels to the 2008 market downturn, while sellers struggled to find willing participants at current price levels. Additionally, the Indian market's sentiment was further impacted by the Turkish market, where bearish trends influenced decision-making among Asian buyers. The impending nationwide port workers' strike, which began on 28 August, added to the uncertainty, with disruptions to trade and port activities.

Although some suppliers believe that prices are nearing the bottom, a significant recovery seems unlikely before mid-September. The market remains under pressure, with the end of the monsoon season and potential demand recovery in September offering the only glimmers of hope.

Pakistan: Shredded scrap offers from the UK/Europe edged up slightly by $2/t to $399/t CFR-Qasim this week due to higher supplier offers amid exchange rate fluctuations, despite moderate activity. Mills showed limited interest in new bookings, as buyers remained cautious, influenced by weak liquidity, the ongoing monsoon, and concerns over potential declines in rebar and billet prices. The market slowdown was further compounded by the end-of-month bill week, which restricted cash flow and purchasing activity.

While suppliers were slightly optimistic, buyer sentiment stayed subdued, with many focusing on meeting only immediate needs.

A notable development was Fauji Foundation's interest in acquiring Agha Steel Industries, leading to a 10.03% rise in Agha Steel's stock. This potential acquisition points to a strategic move toward sector consolidation. However, overall market conditions remained cautious, with uncertainty driven by both weather and economic factors.

Bangladesh: Bangladesh's imported scrap market remained subdued throughout the week, with minimal trading activity. The market was largely impacted by severe floods and the ongoing rainy season, which significantly slowed construction activities and reduced scrap demand.

Indicative offers for shredded scrap from the UK/Europe ranged from $400/t to 405/t CFR Chattogram, while HMS (80:20) offers were at around $390-395/t CFR.

Despite these offers, buyers showed little interest, anticipating further price declines and hindered by logistical challenges due to the floods. The market's inactivity was further exacerbated by delays in letter of credit (LC) issuance and financial verification issues, leaving the overall sentiment cautious and uncertain.

Japan: Japanese H2 scrap export offers have continued to decline for the seventh consecutive week, dropping by JPY 5,500/t ($38/t) in August. Currently, offers stand at JPY 44,500/t ($307/t) FOB Tokyo Bay, down JPY 2,000/t ($14/t) from last week.

This decline was driven by the JPY's earlier strengthening, making Japanese scrap more expensive for international buyers, and weak demand in key markets such as Vietnam and South Korea. The global steel market downturn and increased competition from cheaper alternatives such as billets have further dampened interest in Japanese scrap, leading buyers to seek more competitively priced options from South Korea, Hong Kong, and Russia.

Tokyo Steel recently announced a reduction in its domestic scrap procurement prices, effective 30 August 2024. The company decreased prices by JPY 500/t ($3/t) at its Utsunomiya plant, bringing them down to JPY 45,500/t ($313/t). Meanwhile, prices at the Tahara and Okayama plants remained stable at JPY 46,000/t ($317/t).

Vietnam: In Vietnam, demand for Japanese scrap remained weak, as local buyers favoured domestically sourced scrap, priced around $340/t. As a result, offers for Japanese H2 scrap dropped to $356-360/t CFR Vietnam, down from $360-370/t the previous week. Vietnamese mills observed that demand for both flat and long steel had not yet picked up, further contributing to the hesitation to purchase more expensive Japanese scrap.