Weekly round-up: Imported ferrous scrap prices witness downtrend w-o-w amid thin trading

The global ferrous scrap prices declined this week. In the South Asian market, Indian buyers hesitated to book imported scrap due to a significant gap between domestic and imported prices. Pakistan's market stayed sluggish amid slow demand in the domestic finished steel market ahead of the February elections. Bangladeshi buyers encountered difficulties in opening Letters of Credit (LCs).

Japan's H2 scrap export offers remained unchanged due to limited buying interest from major importing nations. Tokyo Steel, a prominent Japanese steel mill, reportedly decreased its domestic ferrous scrap purchase prices by JPY 2,000/t ($14/t).

Turkiye: Turkish imported ferrous scrap prices declined due to uncertain price trends and sufficient inventories, reducing the urgency for re-stocking. Some buyers, recognising the downward trend, closed deals in response to urgent needs. However, overall market strengthening is anticipated only when there is a clear price direction. The weekly average bulk HMS (80:20) scrap offers from the US dropped to $419/t CFR Turkiye from $423/t CFR in the previous week.

As per market participants, if buyers commit to procuring 40 cargoes again, there's a higher likelihood of witnessing a price premium, potentially reaching $420-425/t CFR next week, as opposed to the $415-420/t CFR range observed this week. Additionally, the surge in bulk freight rates added another layer to the dynamic market conditions.

Sluggish Turkish rebar sales led to decreased scrap consumption, with domestic transactions in Iskenderun at $630-640/t exw and in Izmir ranging from $620-630/t exw. Export offers hovered around $620/t FOB, with some deals closing at $615/t FOB. The scrap-to-rebar spread was assessed at $195-200/t FOB.

India: This week in India, potential buyers opted to stay on the sidelines due to a significant gap between bid and offer prices. Additionally, domestic scrap prices proved to be more economically attractive compared to imported scraps, resulting in subdued demand for imported scrap.

An official from a steel mill stated, "There is a significant gap between domestic and imported prices, making imports financially unviable, with a minimum gap of $20/t. Therefore, we will refrain from booking imported scrap until it becomes economically feasible, opting to purchase domestic scrap as needed."

Another steel mill official stated, "We have sufficient inventories until March, with a focus on domestic procurement. Additionally, we are opting for sponge iron in the charge mix for its cost-effectiveness. Consequently, there is currently no interest in booking imported scrap."

The weekly average offers for shredded scrap from Europe experienced a decline of $6/t, reaching $415/t CFR Nhava Sheva, compared to the previous week's $421/t. Simultaneously, HMS (80:20) scrap offers were at $397/t CFR, marking a $4/t decrease from the previous week's $401/t CFR.

Pakistan: Imported scrap demand in Pakistan remained sluggish throughout the week, influenced by a slowdown in domestic finished goods production ahead of the upcoming elections in February. The weekly average offers for shredded scrap from Europe were reported at $438/t CFR Qasim, showing relative stability compared to the previous week. Moreover, from the Middle East offers were noted at $450-455/t CFR Qasim, while HMS scraps were priced at $410-415/t CFR.

Within the domestic market, certain steel mills like Faizan Steel, Naveena Steel, and Moiz Steel made adjustments to grade 60 rebar prices, increasing them by PKR 3,000/t ex. The revised prices for 9.5/10mm and 12mm rebars ranged from PKR 268,500-271,500/t, while prices for 12mm and above were set at PKR 266,500-269,500/t. These adjustments were deemed necessary by steel mills in response to recent fluctuations in operational costs, rising input expenses, and the prevailing market conditions.

A steel mill representative highlighted, "Rebar sales are slow, with some mills offering below market rates. The dip in sales is attributed to the seasonal lull in winter, and the approaching elections have led to hesitancy in bulk bookings."

Bangladesh: The Bangladesh imported ferrous scrap market experienced a slowdown during the week, influenced by the aftermath of recent elections, leading to a slight decrease in offers. The challenges were further compounded by a persistent dollar crisis.

The weekly average offers for shredded scrap offers from Europe were assessed at $440/t CFR Chattogram, down by $2/t as against $442/t CFR a week ago.

A representative from a trading company stated, "We have successfully unloaded a bulk vessel from Australia containing 34,000 t of mixed materials. The shipment took 7-10 days. Currently, the market is sluggish with a slow money flow. However, we anticipate an improvement in the finished market soon, which should lead to a better response from buyers."

Japan: Japanese H2 scrap export offers remained steady w-o-w at JPY 53,800/t ($363/t) FOB Tokyo Bay, attributed to limited buying interest from major importing countries.

A Japanese trader noted, "Prices are unchanged from last week, and demand for scrap from Japanese mills remained robust, maintaining stability after the JPY 2,000/t increase last week. However, FAS collection prices have held steady."

FAS collection prices in Kanto Bay saw a slight improvement, reaching JPY 51,500-52,500/t ($348-354/t), compared to the previous week's range of JPY 51,000-52,000/t ($344-351/t).

Additionally, Tokyo Steel, a prominent Japanese steel mill, has reportedly decreased its domestic ferrous scrap purchase prices by JPY 2,000/t ($14/t), effective from 26 January 2024. The new effective price for H2 scrap is approximately JPY 51,000/t ($346/t) for the Utsunomiya plants.

South Korea: South Korean mills showed little interest in securing scrap from the seaborne market, despite receiving multiple offers from Japanese suppliers throughout the week.

The iron scrap inventory for the eight South Korean steel companies was estimated to be around 725,000 t, indicating a 4% increase or 28,000 t compared to the previous week.

As of 22 January, scrap arrivals at major ports in South Korea totalled 61,500 t. Out of which, Hyundai Steel accounted for 27,200 t, with 17,200 t in Incheon and 10,000 t in Pohang. Dongkuk Steel reported only 4,000 t, SeAH Besteel had 13,000 t, and POSCO held 12,000 t, with 8,000 t in Gwangyang and 4,000 t in Pohang. There were no arrivals at Masan Port, and Daehan Steel had only 2 cargoes totalling 5,300 t at Busan Port.

Taiwan: Taiwanese mills stayed unresponsive throughout the week, despite receiving active offers from Japanese mills. The lack of interest is attributed to the ample inventories already on hand, coupled with a slowdown in activities ahead of the upcoming Lunar New Year holidays.