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Scrap wrap: US tariffs level the market

Jun 08, 2018 | 02:23 PM |

Tags  Turkey scrap prices, US scrap prices, India scrap prices, Taiwan scrap prices


LONDON — Turkish scrap import prices became firmer in the week ended Friday June 8 with demand for steel from the country’s mills increasing after the United States implemented its Section 232 tariffs on imports from the European Union, Canada and Mexico, effectively leveling international markets.

This trend was in contrast to scrap prices elsewhere, however, with weak demand in India and Taiwan resulting in softer import prices.

Turkey imports
Turkish deep-sea scrap import prices increased this week, as expected, following the decision by the US to impose Section 232 import tariffs on steel from Canada, the EU and Mexico, which had previously had a temporary exemption. Turkey had not had any exemption.

Scrap demand in Turkey had been expected to pick up after the US imposed the tariffs of 25% on steel imports and 10% on aluminium imports on June 1. It was expected that Turkish steel mills would start to export into the US market again, now that other suppliers face similar tariffs.

A steel producer in the Marmara region booked a European cargo late on June 1, comprising 20,000 tonnes of a 75:25 mix of No 1 and No 2 heavy melting scrap (HMS), 18,000 tonnes of a mixture of plate and structural scrap (P&S) and HMS 1, and 2,000 tonnes of busheling, at an average price of $334 per tonne cfr.

On June 5, a steel mill in the Iskenderun region booked a US cargo comprising 12,000-14,000 tonnes of HMS 1&2 (80:20) at $340 per tonne, and 16,000 tonnes of shredded and as much as 2,000 tonnes of plate and structural scrap (P&S) at $355 per tonne cfr. The same mill also booked a Baltic Sea cargo, comprising 3,500 tonnes of HMS 1&2 (80:20) at $340 per tonne, 23,000 tonnes of shredded and 1,500 tonnes of bonus at $355 per tonne cfr.

And another steel mill in the Marmara region booked a 40,000-tonne US cargo, comprising HMS 1&2 (80:20) at $342 per tonne and shredded at $355 per tonne cfr. The breakdown of this cargo was not revealed at the time of publication.

On June 6, a steel producer in the Marmara region booked a US cargo, comprising 12,000-14,000 tonnes of HMS 1&2 (80:20) at $340 per tonne, 16,000 tonnes of shredded and 500 tonnes of plate and structural scrap (P&S) at $355 per tonne cfr.

On the same day, a steel mill in Northern Turkey booked a US cargo comprising 34,000 tonnes of HMS 1&2 (80:20) at $347 per tonne and 8,000 tonnes of shredded at $355 per tonne cfr.

Another steel mill in the Izmir region booked a Baltic Sea cargo, comprising 27,000 tonnes of HMS 1&2 (80:20) at $341 per tonne and 3,000 tonnes of bonus at $351 per tonne cfr.

And on June 8, a steel mill in the Marmara region booked a Baltic Sea cargo, comprising 28,000 tonnes of HMS 1&2 (80:20) at $344 per tonne and 5,000 tonnes of bonus scrap at $359 per tonne cfr.

US exports
Ferrous scrap export prices on both the East and West Coasts of the United States decreased in the latest bulk sales to Turkey and South Korea, with offers also softening for containerized scrap.

On the East Coast, Turkish mills returned to the US export market on June 5 with two cargoes booked at $340 and $342 per tonne cfr respectively for HMS 1&2 (80:20). The prices for this grade were down by $11-13 per tonne from the previous East Coast sale to Turkey on May 4.

The second cargo’s composition, which was previously unreported, has been confirmed to be 10,000-12,000 tonnes of HMS 1&2 (80:20) and 28,000-30,000 tonnes of shredded scrap.

On June 6, a third East Coast cargo was sold at equivalent prices to Turkey. This cargo contained 12,000-14,000 tonnes of HMS 1&2 (80:20) at $340 per tonne cfr, and 16,000 tonnes of shredded scrap and 500 tonnes of P&S at $355 per tonne cfr.

Despite the steep drop in prices for HMS 1&2 (80:20) on the East Coast, shredded scrap prices only fell by $4 per tonne compared with a transaction on May 4. This matched domestic US shredded scrap offers in Philadelphia for June, which fell by $20 per ton to $345 per ton ($355 per tonne).

Even though domestic and export prices for shredded scrap were at parity on a delivered basis, sources said that shredded scrap prices in the bulk export market were comparable with the domestic Philadelphia price on a shipping-point basis.

One reason why there was firm demand for shredded scrap in the bulk export market was because it has a higher metallic yield than HMS 1&2 (80:20), making shredded cheaper in the recent cargo.

With the yield of shredded scrap at 92% and HMS 1&2 (80:20) at 88%, those prices are equivalent to $385.86 per tonne for shredded scrap and $386.36-388.64 per tonne for HMS 1&2 (80:20) on a metallic yield basis.

Meanwhile, containerized shredded scrap on the East Coast was trading at $335-340 per tonne fas over the past week, down on the high end from $335-345 per tonne two weeks ago. Sources said that offers were drifting closer toward the bottom end of the price range.

On the West Coast, prices for containerized HMS 1&2 (80:20) have trended downward for two consecutive weeks, with buyers seeking to reduce the offer prices due to weaker demand, according to market participants. Prices fell to $310-315 per tonne fas this week from $325-330 per tonne two weeks ago.

Taiwan imports
Import prices for containerized HMS-grade scrap in Taiwan dropped further this week amid persistently poor end-user demand in the spot market.

Deals were concluded at $325 per tonne cfr Taiwan in comparison with last week’s $335-340 per tonne cfr Taiwan. Demand was not strong, with a very few end-users purchasing only small quantities. A major buyer purchased about 1,000-2,000 tonnes at the above price, according to market sources.

Bids for US-origin containerized cargoes were made at $325 per tonne cfr Taiwan, with most sellers prepared to offload materials at that price.

A crackdown on the smuggling of ferrous scrap out of China has not had any effect on the Taiwanese spot market so far, but could increase demand for non-Chinese scrap in other parts of Asia such as Vietnam.

Bearish sentiment is expected to persist in the meantime because demand in Taiwan is not expected to pick up any time soon, with the approach of summer, when electric-arc furnace mills reduce their electricity consumption. Household consumers are given priority for electricity supplies during the hot season.

India imports
Prices for containerized shredded scrap imports into India dipped this week after deals were done at lower prices, with the market remaining subdued.

Several deals for UK-origin material were done at $375 and $377 per tonne cfr Nhava Shava, but material was available in the market on offers as low as $370 per tonne with the same delivery terms.

Middle East-origin material was offered at $360 per tonne cfr Nhava Sheva, while deals were heard for UK-origin HMS 1&2 at $345-350 per tonne this week.

The continuing fall in the Turkish scrap price this week kept sentiment in the Indian market negative, as did the imminent monsoon season in India. This is also likely to bring prices down, market participants told Metal Bulletin.

Turkey domestic

Turkish domestic auto bundle scrap prices moved down in line with the weakening imported scrap values, while ship scrap prices remained stable from the previous week, sources said on June 4.

A number of steel producers in the country reduced their buy prices for auto bundle scrap by around TRY20-90 ($4-19) per tonne delivered.

Metal Bulletin’s weekly price assessment for domestic auto bundle scrap (DKP grade) in Turkey was TRY1,380-1,560 ($305-345) per tonne delivered on June 4, narrowing downward from TRY1,380-1,580 per tonne a week earlier.





Cem Turken, Mugla,Turkey; Carrie Bone, London; Paul Lim, Singapore; and Mei Ling Toh, New York, contributed to this report.

Ross Yeo
ross.yeo@metalbulletin.com



 

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