Weekly round-up: Imported ferrous scrap prices fall w-o-w amid moderate trade activity

Global ferrous scrap prices experienced a downward trend this week too. In Turkiye, the steel sector is contending with rising energy costs, and the need to strike a balance between prices and production costs, potentially impacting competitiveness. Meanwhile, India's demand for imported ferrous scrap remained cautious as buyers observed price trends before making significant purchases. Pakistan's imported ferrous scrap demand also remained stagnant due to concerns about potential price drops and currency fluctuations. In Bangladesh, challenges with letters of credit hampered the imported scrap market. Japan, South Korea, and Vietnam faced limited activities with subdued demand, and pricing disparities impacted these markets w-o-w.

Turkiye: The Turkish steel industry faces challenges with rising energy costs and demand uncertainty. Tariffs might increase production costs by $8-12/t, impacting competitiveness. Steelmakers aim for lower scrap purchase prices, targeting $365/t CFR for European HMS (80:20) and $370/t for the same from the US. Turkish rebar export price at $570/t (FOB) maintains a $200/t spread with scrap, but higher energy costs risk mills operating at minimal profits or losses if trends persist.

This decline in scrap prices has given rise to a prevailing bearish sentiment in the market, with many industry participants expecting further drops in the near term.

In recent developments, European scrap cargo was sold to Turkiye at $365/t CFR for HMS (80:20), adjusted from the last purchase rate. Multiple scrap parcels from the US including HMS (80:20), shredded, and bonus, booked at $370-391/t, CFR Turkiye for late October to early November delivery.

India: India's demand for imported ferrous scrap remained subdued as buyers opted for a cautious approach at the start of the week, observing price trends before committing to significant purchases.

However, in the past two days, there has been a slight uptick in trading activity. Nevertheless, the deals that have been finalised during this period are at lower price levels compared to the previous week.

Some buyers have chosen to remain on the sidelines, planning to stay out of the market until the end of October, as they have already secured an adequate amount of material.

Offers for shredded scrap from Europe destined for India have seen a decline of approximately $12/t w-o-w, settling at $410-412/t CFR Nhava Sheva, in contrast to $424/t CFR a week ago.

Similarly, offers for HMS (80:20) scrap originating from Europe have dropped by $12-14/t, closing at $398-400/t CFR Nhava Sheva, compared to $412/t CFR a week ago.

Pakistan: In Pakistan, imported ferrous scrap demand remained stagnant as buyers held off on bookings, fearing potential drops in offers. This caution was driven by the strengthening of the PKR against the US dollar. Additionally, major steel mills in the domestic market opted to reduce semi-finished and finished steel prices to stimulate sales.

Shredded scrap offers from Europe stood at $414/t CFR Qasim, down by nearly $14/t as against $428/t CFR a week ago.

Bangladesh: Bangladesh's imported ferrous scrap market remained sluggish this week due to ongoing issues with opening letters of credit. Shredded scrap from Europe was priced at $430-432/t CFR Chattogram, while HMS (80:20) scraps were at $418-420/t CFR. PNS scraps from various origins (Singapore, Malaysia, Hong Kong, and the Netherlands) were reported at $445-450/t CFR Chattogram, with bids slightly below these levels. Australian-origin HMS scrap was offered at $420-422/t CFR.

The domestic steel market saw reduced production at major mills, with rebar prices at BDT 91,000-93,000/t ($826-844/t) exw-Chattogram and BDT 81,000-82,000/t ($735- 744/t) exw-Dhaka. Domestic billets were assessed at BDT 66,000-68,000/t ($599-617/t), and domestic scrap prices ranged from BDT 54,000-54,500/t.

Additionally, the Bangladesh Bank raised its policy rate by 75 basis points to 7.25% to combat inflation.

Japan: Japan's H2 scrap export offers decreased w-o-w due to subdued demand from key importing nations like South Korea, Vietnam, Taiwan, and Bangladesh. A few deals had been concluded to Taiwan, however, the deal price was lower than the last bookings, impacting the overall export offering.

Moreover, the limited availability of Chinese ships due to ongoing holidays hindered Japanese traders from extending their offers.

South Korea: South Korean mills have been displaying limited interest in purchasing imported scrap. This lack of enthusiasm is primarily attributed to subdued demand in the domestic market and disparities in bid-offer prices for Japanese scrap.

This week, the combined inventory of eight South Korean steel manufacturers stood at 866,000 t, marking a decrease of 38,000 t, equivalent to 5%, compared to pre-holiday levels. Remarkably, of this 38,000-t decline, POSCO's inventory reduction accounted for nearly the entire amount, with a substantial decrease of 37,000 t.

Vietnam: Vietnamese scrap buyers are not displaying much interest in procuring imported material amidst the subdued finished steel sector in the domestic market.