Weekly round-up: Imported ferrous scrap prices remain volatile amid high freight concerns

Global ferrous scrap prices exhibited a mixed trend w-o-w. In South Asian markets, Indian buyers remained on the sidelines due to price disparities. Pakistani steel mills adopted a need-based approach for imported scrap, favouring Middle East material due to uncertainties in European offers and expedited shipments from the Middle East. The Bangladeshi market continued to grapple with post-election effects and a slowdown in the domestic steel sector.

Japanese export offers increased during the week, driven by higher bids from Vietnamese buyers and a significant rise in the Kanto scrap export tender.

In contrast, China's Shagang Steel reduced scrap procurement prices by RMB 30/t ($4/t), effective from 18 January.

Turkiye: Turkish mills were hesitant to engage with overseas suppliers, and scrap collectors refrained from firm offers amid factors like severe winter weather and currency fluctuations. Limited transactions and varying price trends characterised the Turkish imported ferrous scrap market.

An EU recycler highlighted the importance of material possession amid currency fluctuations. HMS collection costs in the Benelux region ranged from Euro 335-348/t delivered to docks.

Sell-side sources cited constrained scrap availability, with US-origin HMS (80:20) offered at $427-429/t CFR. Buy-side sources dismissed availability concerns, anticipating potential price softening due to mill pressure and euro devaluation.

Assessment for US-origin bulk HMS (80:20) was $422/t CFR Turkiye, down by $3/t w-o-w. The scrap-to-rebar spread was $192-196/t with the FOB price for rebar stood at $618/t.

India: During the week, interest in purchasing imported scrap in India remained subdued, primarily due to the disparity between offers and bids. Additionally, some buyers showed a preference for materials from Southeast Asia and Australia, citing the advantages of swift shipment and shorter voyage times. A bulk vessel, carrying 35,070 t of mixed scrap, docked at Kandla port, and notably, Mono Steel Gujarat made the acquisition.

An official from a steel mill remarked, "We are not actively seeking new offers at the moment, as the previously booked material is facing delays and is anticipated to arrive by February."

A trader stated, "The market is currently experiencing a slower pace, and we are maintaining our existing offers, given the apparent lack of interest in the market at this time."

On a weekly average, shredded scrap offers from Europe were assessed at $421/t CFR Nhava Sheva, a marginal increase of $1/t compared to $420/t CFR a week ago. Meanwhile, HMS (80:20) offers averaged $401/t CFR Nhava Sheva, rising by $1/t compared to the previous week's $400/t. Importantly, imported scrap offers saw a mid-week increase due to higher freight rates but remained volatile during the week amid weak downstream demand.

As per a trade source, current freight rates are notably elevated, with the UK-to-Mundra freight doubling and presently standing at $1,500-1,800/container.

Pakistan: Throughout the week, the demand for imported scrap remained at a moderate level, with buyers opting to book based on immediate needs. A noticeable trend was observed as buyers shifted towards the Middle East market, driven by uncertainties in offers from Europe, particularly heightened by the Red Sea crisis, and the appeal of faster shipments from the Middle East.

A representative from a trading company provided insight, stating, "We currently do not have any new offers. We are awaiting stability in terms of Red Sea freight surcharges. Our goal is to avoid a situation where additional surcharges are introduced after a transaction, leading to a negative margin."

On a weekly average, shredded scrap offers from Europe were evaluated at $439/t CFR Qasim, reflecting a $5/t increase compared to $434/t CFR a week ago. Towards the end of the week, Middle East offers were reported at $435-440/t CFR.

Bangladesh: Post-election, Bangladesh's imported ferrous scrap market saw varied prices and subdued buyer interest. Europe-origin shredded scrap was at $435-445/t CFR Chattogram, and HMS (80:20) at $415-420/t CFR. Recent smaller bulk cargo completion had minimal impact. Bangladeshi mills faced competition for Japanese materials. Recent deals include HMS (90:10) from Australia at $415/t and Australia-origin HMS sheared at $411/t CFR Chattogram.

Europe-origin shredded container assessment dropped $1/t to $438/t w-o-w. In the domestic market, rebar prices ranged from BDT 82,000-87,000/t in rolling mills and BDT 90,000-94,000/t in major primary mills. Ship-breaking scrap was at BDT 67,000-70,000/t, busheling scraps at BDT 69,000/t, and PNS scraps at BDT 70,000-72,000/t exw. Billet prices hovered at BDT 75,000-77,000/t on an exw basis. The Bangladesh Bank increased the policy rate to 8% from 7.75% for January-June 2024, introducing a crawling peg for exchange rates.

Japan: Japanese H2 scrap export offers saw an increase during the week, driven by higher bids from Vietnamese mills and a significant uptick in the Kanto export tender held on 16 January. BigMint's weekly assessment revealed a JPY 2,000/t ($13/t) rise, bringing the export offers to JPY 53,800/t ($362/t) FOB Tokyo Bay, compared to the previous week's JPY 51,800/t ($348/t) FOB.

The Kanto scrap tender for January in Japan concluded with a noteworthy JPY 2,061/t ($14/t) m-o-m increase in bid prices. The winning bid, directed towards Vietnam and Bangladesh, amounted to 15,000 t at JPY 53,081/t ($363/t) FAS, indicating robust demand in these regions with a shipment deadline of 29 February.

Tokyo Steel, a leading Japanese steel mill, responded by raising its domestic ferrous scrap purchase prices by JPY 2,000/t ($13/t), effective from 17 January, 2024. The new effective prices for H2 scrap were approximately JPY 53,000/t ($356/t) for the Tahara, Utsunomiya, and Okayama plants.

Vietnam: Vietnamese mills were actively seeking Japanese H2 scraps in response to restocking demand ahead of the Lunar New Year holidays. This heightened interest was fuelled by increased capacity utilisation rates and a surge in rebar and billet prices. In the bidding process, Vietnamese mills have proposed bids for H2 scraps at around $395-400/t CFR, while Japanese suppliers were presenting offers at $405-410/t CFR.

South Korea: South Korean steel mills displayed interest in Japanese H1/H2 50:50 grade scrap at JPY 52,500/t ($354/t) FOB Japan. Nevertheless, these prices were considerably lower compared to those offered in Vietnam and Taiwan, resulting in a lack of interest from Japanese exporters in the South Korean market.

The combined iron scrap inventory of eight South Korean steel firms for the current week reached 697,000 t, showing a reduction of 65,000 t or about 8.53% compared to the previous week.

China: Shagang Steel has recently decreased procurement prices for ferrous scrap across all grades by RMB 30/t ($4/t), effective 18 January, 2024. The adjusted price stood at RMB 3,000/t ($419/t) for HMS (6-10 mm), inclusive of 13% VAT. This is the second consecutive price cut in 2024 after three consecutive increases of RMB 150/t ($21/t) in the last two weeks of 2023.