Ferrous Market Update: Jun 28-Jul 2

Ferrous Market Update 07/02/2021

Turkey

• The daily Davis Index for Turkish imports of US-origin HMS 1&2 (80:20) remained unchanged on Friday amid a standoff between mills and exporters.
• Buyers and sellers remain firm with mills bidding $495/mt cfr for HMS 1&2 (80:20) from the USA and the Baltic region, while sellers are offering the material above $500/mt cfr. Some recyclers are unwilling to negotiate below $510/mt cfr, resulting in fewer offers in Turkey, where mills have to purchase for August shipments.
• In the short-sea market, several transactions were fixed in the Azov-Black Sea basin recently. A Karadeniz-based mill bought HMS 1&2 (90:10) at $463/mt cfr from Ukraine and HMS 1&2 (80:20) at $459/mt cfr, and bonus material at $469/mt cfr from Bulgaria. An Izmir-based mill purchased HMS 1&2 (85:15) at $465/mt cfr from Ukraine.
• Spot rebar prices in the Turkish domestic market climbed by TRY10/mt on Friday and trading revived by the end of the week. ($1=TRY8.69)

Turkey domestic

• The weekly Davis Index for DKP scrap (equivalent to auto bundles) in Turkey was unchanged on Monday as most Turkish steelmakers opted to hold their purchase prices.
• Purchase prices for shipbreaking scrap in the Izmir region remained flat at $480/mt delivered for the fifth consecutive week. ($1 = TRY8.74)

CIS

• The weekly Davis Indexes for HMS 1&2 (80:20) or A3 scrap from Russia’s Baltic Sea and Black Sea regions dropped by $16/mt and $20/mt, respectively, on Monday on rising freight rates.
• Sporadic bids and offers for HMS 1&2 (80:20) from St Petersburg have remained at $490-495/mt cfr Turkey and $500-510/mt cfr, respectively, over the past two weeks resulting in an inactive market.
• Turkish mills are bidding $450-460/mt cfr for A3 material from Rostov-on-Don, but this price level is not acceptable for suppliers, who have stepped back from the market. On the other hand, a South Korean mill accepted an increase and purchased 57,000mt of A3 material from the Far East of Russia at $518/mt cfr last week.
• Collection prices in Russian export yards decreased with the weekly Davis Index for A3 scrap declining by RUB1,625/mt in St Petersburg dock and by RUB450/mt in Rostov-on-Don dock. ($1=RUB72.19)

Europe

• The weekly Davis Index for HMS 1&2 (75:25) in the ARAG region decreased by €6/mt on Tuesday in a sluggish market.
• Most exporters from the Netherlands (Amsterdam, Rotterdam) and Belgium (Antwerp, Ghent) reduced ferrous scrap collection prices due to weak demand at foreign destinations, despite an anaemic material inflow due to a strong domestic market in the EU.
• Offers from the ARAG region to Turkey are scarce and demand is subdued, because of which, trading has been muted since the beginning of June. (€1 = $1.19)

UK dockside

• Davis Index’s weekly north and south UK HMS 1&2 (80:20) ferrous scrap indices fell by £6/mt ($8/mt) delivered dockside, on Tuesday. 
• UK dockside ferrous scrap purchase prices decreased by £2-6/mt over the past week, after a large British bulk exporter was heard to have dropped rates while most others held unchanged. 
• A large ferrous scrap exporter also dropped HMS 1&2 (80:20) dockside purchase prices by up to £10/mt to reduce the flow of material into specific yards. The same ferrous scrap processor was also rumoured to have engaged a small bulk coaster to ferry material from yards that were possibly piling up with stocks.  
• The weekly indices for north and south UK OA (Plate & Structural) nudged £2/mt lower while the north and south UK 5A/5C (frag feed) ferrous scrap indices remained unchanged over the week. (£1=$1.38)

Spain 

• Davis Index’s northern Spain HMS 1&2 (80:20) and shredded small bulk weekly ferrous scrap indices declined by €15/mt ($18/mt) cfr on Friday.
• Spanish ferrous scrap import prices dropped over the past week following the conclusion of sales heard at €390/mt for HMS 1&2 (80:20), after which bids were subsequently slashed.
• Some major and smaller shortsea suppliers have been pressed to transact at relatively lower levels in response to a build-up in inventories. In fact, some UK-based ferrous scrap bulk exporters were heard to have reduced dockside purchase prices by up to £10/mt this week to stem the flow of material into their yards. 
• A large ferrous scrap processor was also rumoured to have engaged a small bulk coaster to ferry material from yards that were piling up with stocks. 
• Davis Index’s UK small bulk ferrous scrap HMS 1&2 (80:20) and shredded indices dropped by €20/mt fob during the week. (€1=$1.18)

US dockside

• US East Coast and Houston collection prices for ferrous scrap ticked down after climbing for two weeks amid healthy scrap flows and a sluggish export market. Export activity is anticipated to pick up as buyers will soon require material for August shipment.
• Dockside sales for #1 HMS on the East Coast dropped roughly by $10/gt to $370-400/gt on Tuesday based on dock location and base price from prior sales. Market participants on the East Coast had expected the downturn last week.
• The Davis Index for US HMS 1&2 (80:20) exports to Turkey has been rangebound, hanging close to $500/mt cfr for over a month. The index for the grade stood at $499.52/mt cfr on Tuesday compared to $497.50/mt cfr on Jun 22. A longer-term monthly view shows little movement compared to 502.50/mt cfr on Jun 1.
• In Boston, prices were flat as they were still below the levels at surrounding docks. The weekly Davis Index for export yard #1 HMS, P&S 5ft and shredder feed was flat delivered Boston export yard.
• The weekly Davis Index for export yard buying prices in New York fell by $10/gt for #1 HMS delivered, P&S 5ft dropped by the same amount and shredder feed moved down by $8/gt delivered New York dock.
• In Philadelphia, the Davis Index for export yard collection prices moved down by $10/gt for #1 HMS delivered and P&S 5ft fell by $11/gt delivered Philadelphia dock. The index for shredder feed fell by $7/gt delivered.
• Houston’s, the weekly Davis Index fell by $13/gt for #1 HMS delivered on a healthy supply of the material. The index remained unchanged for both P&S 5ft and shredder feed delivered Houston dock.
• US West Coast dock prices trended flat for the third successive week on Tuesday in tandem with East Coast docks that transferred from rangebound last week to small downward price adjustments. The downturn along the East Coast reflects the trend evident in the UK and EU today.
• The daily Davis Index for US-origin HMS 1&2 (80:20) rose by $2.02 to 499.52/mt from $497.50/mt cfr Turkey on Tuesday compared to Jun 22. Turkish import scrap deals may revolve around $500/mt cfr on the grade through July.
• The July US domestic trading week is expected to begin next week after the July 4 holiday with moves of sideways to up $20-30/gt on June settlement prices depending on grade and region. Although Turkey does not purchase ferrous scrap from the West Coast, its movements traditionally influence global scrap trends.
• Iron ore prices have firmed up to $220/mt cfr China after declining to $206.50/mt cfr on Jun 22. The domestic scrap buying levels of most Asian countries actively buying on the West Coast remained flat. In South Korea, ferrous domestic scrap prices are showing resilience on strong demand and limited inventories. Indian buyers note that prices on both coasts of the US are firm despite limited scrap availability.
• Japanese domestic scrap prices have trended flat with limited export placements. Given the domestic strength, US exporters believe it is in the Japanese exporter’s best interest to maintain firm pricing into July. Bangladeshi mills are expected to return for bulk buys after more clarity and economic activities return from the most recent late June lockdown after a surge in COVID-19 infections.
• The weekly Davis Indexes in Portland for export yard scrap continued flat for #1 HMS, P&S 5ft and shredder feed delivered export yard.
• In San Francisco, the Davis Indexes remained unchanged with #1 HMS, P&S 5ft and shredder feed flat.
• The Los Angeles dock prices also were unchanged this week for #1 HMS, P&S 5ft and shredder feed delivered.
• The container market in LA continues at about $400-405/mt fas for HMS 1&2 (80:20) with suppliers seeking deals at $415/mt fas. Some sellers report adequate inquiries, which may allow for gains of $5-10/mt by the end of the week, while others report that limited sales opportunities with their customary clients may limit the upswing.

US domestic

The outlook for the US July ferrous scrap trading week remains sideways to up $20-30/gt against June settled prices depending on grade and region. 

• The rationale for the uptrend continues to be strong scrap demand from mills, tight inventories especially on structural materials and prime grades, continued strong demand for finished steel for the foreseeable months, and high finished steel prices. Flows also increased for shredded and heavy melting scrap in June.
• Some buyers from one of the largest recyclers, which is a subsidiary of a US-based steelmaker were heard promoting a potential sideways market in July due to sufficient scrap flows on seasonality into yards. However, market sentiment is veering towards only #1 HMS showing any weakness due to sufficient inventories depending on the region.
• Mill buyers throughout the Midwest and Southeast were heard actively courting sellers to lockdown needed scrap inventories. Some market participants believe that given the strength of iron ore prices and the high, increasing prices on finishes steel, ferrous scrap, especially prime grades, should have room to climb by $30-50/gt against June settled prices. The reality though is that the latest tick down at docks along the East Coast is having them temper that expectation and returning to the most likely $20-30/gt increase. 
• Normally, July ferrous scrap trades settle after the July 4 holiday that has many companies off on Jul 5 on the federal holiday. However, some market participants noted that the usual seasonal rhythms are difficult to forecast and eager mills could seek to make trades late this week. Others, however, expect to achieve settled prices after the holiday. 
• Hot rolled coil (HRC) prices were $1,829-1,873/mt ($1,660-1,700/nt) fob US mill in mid-June and are now reported at $1,873-1,940/mt ($1,720-1,760/nt) fob US mill, up $44-67/mt in the spot market. 
• In rebar, fabricators are receiving notices that prices are likely to increase in July from $1,036-1,080/mt ($940-980/nt) fob US mill spot market level. Fabricators report difficulty increasing volume buys and continued long lead times. 

US containers

• US containerized ferrous scrap prices reversed the trend from last week with prices firming up on the West Coast and softening on the East Coast ending the latter’s upward trajectory of the past three weeks.  
• Still, buying interest continues on the East Coast though deals are smaller due to firm selling prices and the retreat of some buyers who are unable to proceed at those prices.  
• Some suppliers are reluctant to sell at lower numbers due to better domestic pricing with expected increases of $20-30/gt in the July ferrous trading week against June settled prices. Sellers also expect export transactions to resume at the offer prices in the following weeks due to tight global ferrous scrap inventories.   
• The weekly Davis Indexes in New York fell by $2-8/mt on Thursday after rising by $3-7/mt the prior week. The index for #1 busheling declined by $8/mt while P&S 5ft and shredded fell by $2/mt each. Machine turnings decreased by $4/mt. HMS 1&2 (80:20) maintained its strength and climbed by $1/mt. Some sellers reported slightly higher deals on HMS 1&2 (80:20) while others achieved deal prices at $5/mt lower than last week.  
• Some brokers noted a weak Indian market this week due to price pressure on finished and semi-finished markets per weaker demand.  
• Iron ore price above $219/mt cfr North China is supporting global ferrous scrap prices. A Canadian seller noted the possibility of placing P&S 5ft to China in containerized format. Chinese purchase of ferrous scrap, which has been anticipated since early January 2020 given policy changes in the Asian nation, would further support and fuel ferrous scrap prices. Market participants previously noted that hesitation from Chinese buyers was not due to a lack of desire or need, but uncertainty in the import process to the country which could result in delays or penalties. 
• Japanese ferrous scrap exporters are also maintaining firm prices and receiving support from flat domestic ferrous scrap prices.  
• In Los Angeles, the index for #1 busheling and HMS 1&2 (80:20) rose by $5/mt. Shredded climbed by $4/mt and P&S 5ft rose by $2/mt. Deals to Bangladesh, South Korea, Taiwan, and Vietnam were noted in the western region. 
• San Francisco’s indexes rose after trending down by $1-3/mt the prior week with #1 busheling, P&S 5ft and HMS 1&2 (80:20) rising by $5/m each. 
• In Seattle too, the indexes rose by $4-5/mt after declining by $2-3/mt last week. The weekly Davis Indexes for HMS 1&2 (80:20) and shredded rose by $5/mt. P&S 5ft and #1 busheling climbed by $4/mt. 

Mexico

• Mexican ferrous scrap prices continued trending up, with an average increase of MXN190/mt ($9.60/mt) in the three zones, in part due to higher prices in the steel sector.
• The highest increases were seen in machine shop turnings and #1 busheling, both of which grew by over MXN400/mt this week.
• The weekly Davis Index in Northern Mexico for #1HMS went up by MXN105/mt delivered Mexico consumer on Friday, P&S ft5 rose by MXN308/mt delivered and shredded climbed by MXN150/mt. Machine shop turnings went up by MXN454/mt delivered and #1 busheling prices were up by MXN442/mt delivered on Friday.
• In Central Mexico, the weekly Davis Index for #1HMS climbed by MXN250/mt delivered Mexico consumer on Friday, while P&S 5ft rose by MXN200/mt delivered. Shredded increased by MXN50/mt delivered, machine shop turnings rose by MXN200/mt delivered, and #1 busheling went up MXN300/mt delivered.
• Bajio Mexico’s weekly index for #1HMS climbed by MXN34/mt delivered Mexico consumer on Friday, while P&S 5ft rose by MXN100/mt delivered. Shredded increased by MXN142/mt delivered, while machine shop turnings increased by MXN67/mt delivered and #1 busheling rose MXN50/mt delivered. (MXN1=$0.051)
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India 

• Indian importers stayed largely away from imported ferrous scrap trades on high offers while falling domestic steel prices. Mills faced margins squeezed unable to sell both in the domestic as well as export markets as per their price expectations. 
• A monsoon lull added to worries about COVID resurgences added to the bearish sentiments in India. Wide disparity between offers and bids has slowed trades significantly as sellers opt for other markets. 
• The daily Davis Index for containerized shredded, Friday, rose by $1.5/mt cfr Nhava Sheva. From the prior Friday, the index rose by $7/mt amid the non-availability of low-priced materials at sourcing countries. Depreciated Indian Rupee against US Dollar above 74 held trades slow. 
• The daily Davis Index for US-origin HMS 1&2 (80:20) on Friday was unchanged both on a day and a weekly basis. Deals, however, were limited for the US and UK-origin HMS in India, as most were only interested in UAE origin materials. 
• The daily index for UAE-origin HMS 1&2 (80:20) inched down by $1/mt cfr Nhava Sheva. The index remained unchanged from June 25. There was an expectation of recovery from the prior week’s fall, yet it failed on weaker rebar sales in the UAE domestic market. 
• The Davis indexes for P&S and #1 busheling cfr Nhava Sheva were up by $5/mt from June 25. 
• In Alang shipbreaking market, melting scrap prices on Friday were unchanged ex yards however prices dropped by Rs2,200/mt from the prior Friday. In Mumbai, rebar prices were unchanged since last Friday on subdued demand. In Mandi Gobindgarh, the index for ingot was down Rs1,300/mt from a week prior. Weak domestic cues, pressured demand for imported ferrous scrap.
• Indian mills waited for Chinese steel prices to stabilize with no major changes made in export policy on July 1st. Domestic billet prices on Friday were still higher by CNY20/mt from June 25. Indian primary mills targeted billet export offers above $600/mt fob India even after a decline of around $10-15/mt in global billet prices. 
• With the announcement of export taxes for five months period, Russian mills are likely to liquidate stocks before August 1st. Russian HRC heard sold in Vietnam below international prices mid this week. ($1=Rs74.72)
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Pakistan  

• Pakistani large steel mills booked a limited quantity of containerized ferrous scrap in containers. Furnaces in Lahore are yet to resume purchases in the new financial year beginning. Few importers however are wary of the delta variant starting a new wave of COVID-19. Heavy monsoon rainfall could also hurt logistics. 
• The daily Davis Index for containerized shredded, Friday, cfr Port Qasim, up by $0.29/mt. From last Friday, the index rose by $7.5/mt. Mills are waiting for the market to absorb the recent price hikes for finished steel and billet before showing a willingness to raise their bids for imported ferrous scrap. 
• In Turkey, imported ferrous scrap prices showed signs of strength. Mills resumed August shipment bookings on tight global availability. Rebar demand in Turkey and Asia remains slow. 
• Trades for UAE-origin material slowed after a week of rapid activity. The daily Davis Index for UAE-origin HMS 1&2 (80:20), Friday, settled cfr Port Qasim unchanged from a day ago but up by $4/mt from last Friday. Deals for UAE-origin mixed #1 HMS and P&S up at $495-500/mt cfr Port Qasim, with offers higher by $5/mt than these levels. 
• The index for US-origin HMS 1&2 (80:20), Friday, cfr Port Qasim, up by $1.46/mt from a day ago and up by $5/mt from the prior Friday. Container freight rates remained elevated resulting in increased landed costs. In the US domestic market, bullish HRC prices and anticipation of firm July monthly settlements held demand for ferrous scrap healthy. 
• The daily Davis Indexes for P&S 5ft rose by $5/mt and #1 busheling up by $4/mt. Most buyers remained away from any purchases of high-grade scrap.
• Amid the tight supply for ferrous scrap and the resulting rise in input costs, major rebar producers are eyeing a further rise in the coming days. The weekly Davis Index for rebar was stable ex-works Karachi and rose ex-works Punjab by PKR250/mt. 
• A huge gap of upto PKR10,000/mt between steel prices in the global market and Pakistan could also support steelmakers to raise offers. 
• The index for domestic Bala billet increased by PKR3,250/mt ($21/mt) to PKR120,000/mt ($762/mt) ex-works. The weekly Davis Index for G-60 billet was at ex-works Punjab, up PKR2,250/mt from the prior Friday.
• Following firm imported scrap offers and tight domestic supply, the weekly indexes for Art Q toke scrap (equivalent to a mix of HMS and P&S) and Pure Q toke scrap (equivalent to shredded), Friday, ex-yard Lahore, up by PKR1,500/mt and PKR2,000/mt, respectively. ($1=PKR157.47)
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Bangladesh

• Bangladeshi mills were largely away from booking imported ferrous scrap, with the government announcing week-long stringent restrictions to curb the spread of the delta variant of COVID-19. 
• On weak finished steel sales, mills were unable to hike domestic prices. Rising raw material prices, on the other hand, pressured margins. Monsoon seasonal slowdown also kept small mills out of the market.
• The daily Davis Index for containerized shredded settled unchanged cfr Chattogram on Friday. The index rose by $2/mt from last Friday. Sellers kept their asking prices higher by $20/mt at the minimum in Bangladesh compared to Pakistan, to accommodate the elevated freight variation between the two countries. 
• The daily Davis Indexes for HMS 1&2 (80:20) from Latin America, UK-origin and Australia origin on Friday, were unchanged cfr Chattogram. On Friday, the daily index for US-origin containerized HMS 1&2 (80:20) settled unchanged at $530/mt cfr Chattogram. The index rose by $3.75/mt from a week ago. 
• The market was silent for prime grades this week. The weekly indexes for P&S and #1 busheling were unchanged cfr Chattogram, respectively. Due to weak finished steel sales amid national lockdown, most mills either postponed purchases or kept bids very low.  
• The weekly indexes for ship scrap equivalent to P&S and domestic HMS 1&2 (80:20) settled ex-yards, unchanged on Friday. The weekly indexes for billet and rebar from large-scale mills were unchanged too ex-works.
• For shipbreaking yards asking prices for scrap and plates were lifted on higher cutting costs. Ship demolition rates have dropped drastically since the beginning of monsoon season, adding to the domestic shortage. Shipbreaking plates’ offers for 16mm rose to ex-yards on Friday, up by BDT1,500/mt from a week prior. ($1=BDT84.8)

Metallics

US/CIS

The weekly Davis Index for basic pig iron (BPI) increased by $7/mt cfr New Orleans port Friday on more offers and sales to alternative destinations. The weekly Davis Index for CIS BPI rose by $8/mt fob Black Sea on Friday.

• Activity is slow in the US with the markets quiet ahead of the July domestic scrap trading slated to begin next week. The most recent BPI transaction last week was reported at $645/mt cfr Nola while offers and bids moved up to some extent this week and range between $645-680/mt cfr Nola.
• The Davis Index for nodular pig iron (NPI) imports rose by $5/mt cfr Nola. The grade is in tight supply with offers for future shipment only. Latest offers for NPI continue firm at $750-780/mt cfr Nola with bids just under this low point.
• US hot briquetted iron (HBI) imports moved up by $8/mt cfr Nola as new offers and bids are lacking for the grade. The price level for this material is calculated to include the latest offers along with price comparisons with similar grades.
• CIS pig iron suppliers switched to alternative outlets since the US market became quiet. A deal was reported in Italy, where Ukrainian material was booked at $655/mt cfr. As a result, the weekly Davis Index for CIS BPI in Italy increased by $5/mt cfr.
• In Turkey, a trader purchased a cargo of low-manganese pig iron from the CIS at $680-682/mt cfr for distribution to foundries.