Weekly round-up: Global ferrous scrap prices witness mixed trends w-o-w in major markets

This week, global ferrous scrap prices showed mixed trends. In India, buyer interest declined due to bid-offer disparities and a slow domestic steel market. Pakistan and Bangladesh experienced sluggish activities due to slow downstream demand, budget impacts, letters of credit (LC) opening issues, and the upcoming Eid holiday. Conversely, Turkiye's market saw an uptick in offers as mills kept their inquiries for materials ahead of Eid. Japan faced declining H2 scrap export offers, while South Korea showed renewed interest in seaborne scrap. In China, Shagang Steel announced a third price cut for ferrous scrap in June.

Turkiye: The Turkish imported ferrous scrap market saw a $5/t price increase, supported by a recent US and UK origin deal. Two to three mills are actively seeking cargoes, but limited offers persist. Despite higher prices, steelmakers are preparing to restock 15-20 vessels for July, anticipating stable steel demand next month, although current finished steel sales remain sluggish. US and European recyclers maintain prices due to high collection costs and limited availability.

Last week, European recyclers offered $383-384/t CFR and accepted $380/t CFR. This week, offers increased to $385-386/t CFR, with expectations to accept around $384/t CFR.

• A West Marmara-based steel mill recently booked a US-origin cargo at $386/t CFR Turkiye.
  
  
• A US-origin bulk scrap cargo with HMS (80:20) and bonus was booked by a West Marmara region-based mill at $386/t and $406/t CFR Turkiye.
  
  
• A UK-origin bulk scrap cargo with HMS (80:20) was booked by the Mediterranean at $381/t CFR.
  
  

BigMint's assessment for US-origin HMS (80:20) bulk scrap rose to $385/t CFR, up $5/t w-o-w.

Turkish rebar export prices remained steady at $578-580/t FOB, driven by higher scrap import prices. Turkish mills are hesitant to accept bids below $580/t FOB due to increased scrap costs, operating at about 60% capacity amid subdued global demand. The price rise reflects higher raw material costs and aims to maintain profitability above the $200/t scrap-rebar conversion spread. Scrap import prices into Turkiye remain at $194-196/t.

India: In India this week, the demand for imported scrap remained sluggish due to weak steel demand and significant bid-offer disparities. Steelmakers preferred cost-effective alternatives like sponge iron to manage production costs. Offers for shredded scrap from the US, UK/Europe, and Australia ranged between $415-425/t CFR, while HMS (80:20) hovered at $395-400/t. No significant purchases were made as buyers were unwilling to meet these prices. Additionally, logistical challenges, including doubled freight rates and extended voyage periods due to sea route disruptions, further stalled buying activities.

The domestic finished steel market remained slow, which kept scrap purchasing at a minimal pace. Market insiders noted a significant drop in imported volumes in the first quarter but anticipate a rebound due to infrastructure projects and new housing developments. However, as the monsoon approaches and with suppliers unwilling to lower their prices, the market outlook remains uncertain for the near term.

Pakistan: In Pakistan this week, the imported scrap market remained sluggish. Earlier in the week, a few buyers engaged in pre-Eid restocking; however, interest gradually subsided due to the outcome of the recent federal budget. Market activities slowed as buyers adopted a holiday mood in the latter part of the week. Indicative offers for shredded scrap from the UK/Europe were assessed at $420-425/t CFR Qasim.

The recent reduction in the monetary policy rate by the State Bank of Pakistan to 20.50% was seen as a positive move, but its impact on the market is expected to unfold gradually over the next year. Cash flow issues and a weak finished steel market contributed to minimal trading activity. Many steel mills scheduled maintenance shutdowns during this off-season, further reducing market activity. Despite the overall slow market, some enquiries and purchases were made at previous prices. However, buyers remained cautious, largely staying on the sidelines ahead of the Eid celebrations.

Bangladesh: Imported ferrous scrap offers into Bangladesh remain firm, but steel demand and production levels indicate further declines in rebar and billet prices. Bulk import inquiries from Australia and the US face pricing and LC opening issues. Trade flow is shifting towards Pakistan for restocking.

On the other hand, in a recent Kanto scrap export tender, a Bangladesh-based mill booked around 15,000 t of bulk H2 scrap at JPY 51,267/t ($326/t) on a FAS basis which translates to $395-397/t on a CFR Chattogram basis.

Sellers anticipate a market uptick next week due to rising freight rates. However, current offers for US West Coast-origin cargoes and containerized Australian-origin scrap are not meeting buyer expectations, leading to a wait-and-watch approach.

Japan: Japanese H2 scrap export offers experienced a third consecutive weekly decline due to a lack of buyer interest, even at reduced prices. The recent Kanto H2 scrap export tender concluded with a price drop of JPY 1,226/t, further dampening market sentiment. This decline marks the first in the Kanto tender in three months.

According to BigMint's weekly assessment, Japanese H2 scrap export offers were at JPY 49,500/t ($315/t) FOB Tokyo Bay, a decrease of JPY 800/t ($5/t) from JPY 50,300/t ($320/t) the previous week.

The June Kanto tender showed a significant drop in bids, with the average bid price decreasing by JPY 1,226/t ($8/t) to JPY 51,364/t ($327/t) FAS, equivalent to JPY 52,500/t FOB ($334/t), compared to May 2024's JPY 52,590/t. The tender secured a volume of 25,000 tonnes of H2 scrap.

Vietnam: Japanese H2 scrap export offers to Vietnam saw a slight decrease of $5/t, dropping to $365/t CFR from $370/t CFR in the previous week. However, buyers showed no interest and did not make any counteroffers. At the start of the week, a deal was reportedly concluded at approximately $365/t CFR, but following the Kanto tender conclusion, buyers' asking prices fell, and tradable values were heard at $360/t CFR. In this month's Kanto export tender, a shipment with 10,000 t of H2 scrap was destined for a Vietnam-based buyer at JPY 51,510/t FAS Japan.

South Korea: South Korean steel mills have recently returned to the seaborne market after a long pause due to stable prices, despite the potential for a decline caused by weak downstream demand. A major steel giant, POSCO, has shown interest in Japanese shredded scrap, shindachi, and HS scrap.

As per market insiders, there is a limited supply of shredded scrap in South Korea; thus, there is seaborne demand. Suppliers located along the Sea of Japan were also seeing weak demand for their shredded supply and were thus willing to sell.

This week, the combined ferrous scrap inventory of eight major South Korean steel manufacturers was approximately at 766,000 t, remaining largely stable with a slight decrease of 1,000 t compared to the previous week's 767,000 t.

China: Shagang Steel has announced a further reduction in purchase prices for ferrous scrap, effective 12 June 2024. The updated prices reflect a decrease of RMB 30/t ($4/t). Under the new pricing structure, HMS (6-10 mm) is now priced at RMB 2,740/t ($378/t), including 13% VAT. Notably, this marks the company's third price cut in June, bringing the total decline to RMB 110/t ($15/t).