Weekly round-up: Global ferrous scrap prices witness mixed trends

This week, the global ferrous scrap market displayed a mixed trend. In Turkiye, imported scrap prices declined as Turkish mills withheld purchases, influenced by falling billet import prices and high scrap costs, despite limited supply stabilising prices.

India's market saw subdued demand due to bid-offer disparities and a preference for cost-effective sponge iron over imported scrap, with the monsoon season exacerbating the slowdown in finished steel sales.

Pakistan's market was constrained by high operational costs, leading to minimal scrap consumption amidst weak sales and production cuts, while Bangladesh experienced a slight uptick in scrap prices driven by higher European offers, although rising freights and a sluggish steel market kept workable levels stable.

In Japan, the appreciation of the JPY versus the USD led to reduced export offers and lower domestic scrap procurement prices, while Vietnamese and South Korean markets remained quiet, impacted by currency fluctuations and seasonal holidays.

Turkiye: In the last week of July, Turkish imported ferrous scrap prices showed a declining trend as the market remained inactive, with only previously concluded deals being reported. Turkish mills are holding off on purchases due to a sharp drop in billet import prices and high scrap prices. Limited supply is keeping scrap prices stable despite a bearish market sentiment.

BigMint's assessment for US-origin HMS (80:20) bulk scrap fell to $386/t CFR, down $3/t w-o-w, with US East Coast HMS (80:20) at $357/t FOB.

Turkish mills are securing Chinese billets at a record low of $482-485/t CFR, leading to a 15% reduction in August's deep-sea scrap purchases. Buyers are bidding $380/t CFR for European HMS (80:20) due to reduced US scrap availability. On the other hand, domestic scrap prices in Europe have recently declined. Market insiders expect further softening in scrap prices as Turkish mills benefit from cheaper billet sourcing.

Turkiye and GCC states have initiated free trade negotiations, aiming to enhance investments and market access. The UK also plans to resume trade talks with Turkiye.

India: This week, India's imported scrap market experienced subdued demand due to persistent bid-offer disparities and an unsupportive steel market. Steel mills increasingly favoured sponge iron over imported scrap, driven by cost-effectiveness. Indicative offers for shredded scrap from the US and UK/Europe were at $410-420/t CFR Nhava Sheva, while buyers aimed for $400-407/t CFR. HMS (80:20) offers ranged from $385-395/t CFR.

The ongoing monsoon season has contributed to slow finished steel sales, leading to production cuts and increased sponge iron usage. Despite some buyer inquiries early in the week, the market remained quiet, with buyers prioritising lower-priced alternatives and showing little interest in higher-priced materials.

Notably, around 2,000 t of US-origin shredded scrap were booked at approximately $415-416/t CFR West coast India. Additionally, about 900 t of HMS (80:20) were booked, including 400 t from South Africa at $400/t CFR Nhava Sheva and 500 t from the UK at $390/t CFR Nhava Sheva. Around 1,000 t of handloaded HMS scraps were sourced from Latin America at $405-407/t CFR West coast, and approximately 500 t of HMS-LMS bundle mix were bought from Yemen at $375/t CFR Mundra.

Pakistan: Pakistan's imported scrap market remained dull due to higher operational costs from increased electricity and gas tariffs. The domestic steel market was sluggish, with steel mills operating at reduced capacities-medium-sized mills at 50-60% and the larger ones at 30-40%. Indicative offers for shredded scrap from the UK/Europe hovered around $425-430/t CFR Qasim, with UAE offers slightly higher at $435-436/t CFR. Despite a slight increase in inquiries, actual buying activities remained low due to weak sales and rising production costs. As a result, mills faced squeezed margins. Unable to raise finished steel prices, mills maintained scrap consumption at minimal levels.

Bangladesh: In late July, Bangladesh's ferrous scrap index increased by up to $5/t driven by higher European offers amid rising freight rates. Despite this, workable levels remain stable due to a sluggish steel market and monsoon effect. UK yards are focusing on Turkiye, reducing supply to Bangladesh and India. The General Rate Increase (GRI) has added $200/container to freight costs.

Current offers are $426-430/t CFR for shredded scrap and $405-408/t CFR for HMS (80:20) from Europe. Australian HMS (80:20) is priced at $412-415/t, with Southeast Asian PNS at $444-450/t. UAE HMS 1 is offered at $428-430/t. Similarly, US bulk scrap prices rose by $3-5/t, and Japanese H2 scrap increased by up to $3/t, now at $405/t.

Locally, rebar prices have dropped to BDT 84,000-86,000/t exw-Dhaka, billets at BDT 72,000/t, and shipbreaking scrap at BDT 60,000-61,500/t exy, with market pressures from IMF loan closures impacting prices.

Japan: This week, Japanese H2 scrap export offers experienced a downtrend due to the recovery of the JPY against the US dollar. Notably, while the export offers decreased in JPY terms, they rose in US dollar denomination, leaving buyers surprised and cautious. As a result, market activities slowed following a second round of sharp appreciation in the Japanese currency. A majority of suppliers either revised offers slightly higher or decided to withhold cargoes, anticipating that buyers would reject higher scrap prices in the current sluggish downstream market.

Similarly, the largest EAF steel producer, Tokyo Steel, decided to reduce its domestic ferrous scrap procurement prices, effective 2 August, 2024. The company lowered prices by JPY 1,000/t ($7/t) at its Tahara and Utsunomiya plants, setting the new price for H2 at JPY 49,500/t ($333/t) and JPY 50,000/t ($336/t), respectively. At the Okayama plant, prices dropped by JPY 500/t ($3/t), bringing the new price to JPY 48,500/t ($326/t). The company decided to lower bid prices for all grades of scrap at all its electric arc furnace steel plants due to the significant appreciation of the JPY against the US dollar.

Thus, BigMint's latest assessment of Japanese H2 scrap export offers dropped by JPY 1,100/t ($7/t) to JPY 48,900/t ($329/t) FOB Tokyo Bay in comparison with JPY 50,000/t ($336/t) FOB in the previous week.

Vietnam: Vietnamese steel mills did not place any firm bid for Japanese scrap due to fluctuations in the JPY, making imports from Japan costlier in dollar terms. As a result, no firm offer or negotiation was heard during the week. Instead, Vietnamese mills turned to short-sea sourcing from Hong Kong and reportedly booked a 50:50 grade scrap cargo at around $350/t CFR Vietnam.

Meanwhile, offers for H2 scrap from Japan stood at $365-370/t CFR Vietnam.

South Korea: In South Korea, market activities remained limited during the week due to summer holidays, with most buyers away from the market except for POSCO. POSCO was reported to have shown interest in HS and shredded scrap, submitting a bid for both at JPY 57,500/t ($386/t) CFR South Korea.

The domestic market remained steady, with H2 equivalent light A grade scrap priced at KRW 380,000/t ($278/t), and heavy A grade scrap at KRW 410,000/t ($300/t).