Asian ferrous scrap buyers preferred domestic scrap as imported prices continued to rise amid tight supply, globally.
South Korean domestic ferrous scrap prices trended up this week with mills raising domestic bids amid rising imported scrap offer. Korean steel mills could not book Japanese scrap this week due to rising offers and uncertainty around what price to bid.
The Davis Index for domestic Heavy A rose by KRW60,000/mt($54/mt) and KRW65,000/mt to KRW400,000/mt and KRW410,000/mt ($370/mt) delivered Incheon and Pohang, respectively.
Smaller mills refilled inventories with domestic scrap before the end of December, which is normally an offseason for the construction and real estate sectors, fearing a further rise in domestic scrap prices in January. A few mills preferred lower-priced Light A scrap. The weekly Davis Index for domestic Light A rose KRW65,000/mt to KRW392,500/mt delivered Pohang mill. Trades for the grade reported at the index price. Suppliers held material expecting a price hike amid rising global prices.
In containers, offers for HMS 1&2 (80:20) were heard at $450/mt cfr from Europe, with no deals yet. Steel mills in Korea are cautiously buying containerised scrap and not keen on negotiating for bulk scrap due to rising offers.
The Davis Index for containerized US-origin HMS 1&2 (80:20), Tuesday, rose $27/mt from the prior day to $433/mt cfr Taiwan. Offers rose to $440-450/mt cfr. Many mills held their bid at $410-415/mt resisting high offers. Traders indicated that by the time mills chase an offer, it rises further due to which no deals are getting confirmed. They further added that due to holidays in the coming weeks most yards have limited inventories and are expecting prices to rise further in January.
Taiwanese mill Feng Hsin on Monday raised rebar and ferrous scrap prices by TWD1,000/mt ($35.5/mt) and TWD1,200/mt, respectively.
The weekly Davis Indexes for domestic HMS 1&2 (80:20), Tuesday, rose by TWD1200/mt to TWD10,550/mt ($374/mt) and TWD10,800/mt delivered South Taiwan and North Taiwan mills, respectively.
The weekly Davis Index for HMS 1&2 (80:20) increased by VND17,6250/mt ($7.5/mt) this week to VND8,00,0000/mt ($338.7/mt) delivered South Vietnam inclusive of taxes, with deals heard around the index price. Vietnamese mills are cautiously negotiating for imported scrap amid a shortage of domestic scrap. Due to the continuous rise in offers, mills are adopting a wait-and-watch approach. Mills have increased domestic scrap purchases, while yards are holding back on the expectation of a further rise in prices in January.
In China, Shagang Steel raised finished steel and ferrous scrap prices by CNY200/mt ($30.5/mt) on Tuesday amid rising demand and a further rise in iron ore prices. The steelmakers are focusing on exporting billets and rebars. Iron ore prices rose to $176.9/mt cfr in the first half of Tuesday to later fall $10/mt amid volatility after scaling seven-year high in early December.
Scrap prices might rise further in January due to a rise in demand and a shortage of scrap in the domestic market. China will start importing ferrous scrap from Jan 1.
The weekly Davis Index for the HMS 1&2 (80:20) rose by CNY200/mt to settle at CNY3,000/mt ($458/mt) delivered mill. Deals for P&S 5ft heard at CNY3,500-4,000/mt this week.
On Tuesday, prices for Q235 150mm square billets in Tangshan rose by CNY400-420/mt to CNY4,000-4,020/mt ex-works including the 13pc VAT from the week prior. SE Asian billet exports offered at $600/mt cfr this week.
Most mills and exporters are waiting for price direction in January before confirming any scrap deals.
The weekly Davis Index for domestic HMS 1&2 (80:20) rose THB100/mt ($3/mt) to THB10,400/mt ($344/mt) delivered Rayong mill inclusive of taxes amid cautious buying by Thai mills. Deals for the grade heard at the index price.
Deals for P&S 5ft heard at THB1,100/mt. The imported scrap market remained bullish and a few buyers restocked scrap with material available at the port or domestic yards. Traders said demand for scrap will remain firm and imported prices could rise further in January, which could lift domestic scrap prices.
Higher freight charges and a shortage of containers have forced mills to procure domestic scrap, however, domestic supplies too are inadequate adding to the price rise this week.
The weekly indexes for HMS 1&2 (80:20) rose by MYR75/mt and MYR65 ($16/mt) to MYR1,250/mt ($307/mt), and MYR1,300/mt delivered western mills and eastern mills, respectively, inclusive of taxes. In the prior week, increasing COVID-19 cases had impacted productions and demand in Malaysia, the situation has gradually improved this week. Mills have started raising bids this week and are preferring domestic scrap over high-priced imported scrap, said traders.
Lowering iron ore prices and slow billet demand from China are expected to impact Malaysian mills, who could shift focus to domestic demand.
($1=TWD28; CNY6.5; THB30; MYR4; VND23,170; KRW1,107)