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 shortage of containers, vessel delays and shortage of import scrap due to winter break. 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 KRW17,500/mt($16/mt) to KRW417,500/mt and KRW427,500/mt ($390.8/mt) delivered Incheon and Pohang, respectively.
Smaller mills refilled inventories with domestic scrap amid fears of a further rise in domestic scrap prices in January. The weekly Davis Index for domestic Light A rose KRW17,500/mt to KRW410,000/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, limited offers for HMS 1&2 (80:20) heard at $455/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 high offer prices.
The Davis Index for containerized US-origin HMS 1&2 (80:20), Tuesday, settled flat at $438/mt cfr Taiwan from the prior day. Few offers heard at $440-450/mt cfr. Traders indicated that rising offers are becoming unviable. They further added that due to holidays most yards have limited inventories and are expecting prices to rise further in January.
Feng Hsin Steel on Monday raised rebar and ferrous scrap prices by TWD900/mt($32/mt) ex-works and TWD600/mt delivered mill, respectively. After the revision, the steelmaker’s base price for rebar at TWD18,900-19,000/mt ex-southern mills.
The weekly Davis Indexes for domestic HMS 1&2 (80:20), Tuesday, rose by TWD600/mt to TWD11,150/mt ($396.8/mt) and TWD11,400/mt delivered South Taiwan and North Taiwan mills, respectively.
The weekly Davis Index for HMS 1&2 (80:20) increased by VND3,00,000/mt ($12.9/mt) this week to VND8,30,0000/mt ($357/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.
Few deals for HMS 1&2 (90:10) heard at VND8,40,0000/mt delivered South Vietnam on Tuesday.
In China, Shagang Steel raised ferrous scrap prices by CNY75/mt ($11/mt) on Tuesday from the prior week. Demand is stable as steelmakers focus on exporting billets, rebars and HRC. However, raw material prices are firmer compared to semi-finished prices which fell this week. Iron ore prices fell to $160/mt, Tuesday from $176.9/mt cfr last week amid volatility after scaling seven-year’s 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 and many mills are planning to book ferrous scrap shipments from the US, Australia and Japan, said traders
The weekly Davis Index for the HMS 1&2 (80:20) rose by CNY75/mt to settle at CNY3,075/mt ($470/mt) delivered mill. Deals for P&S 5ft heard at CNY4,050/mt this week.
On Tuesday, prices for Q235 150mm square billets in Tangshan fell by CNY260/mt to CNY3,740/mt ex-works including the 13pc VAT from the week prior. HRC export offers were down by $10/mt on Tuesday. SE Asian billet exports offered at $600-620/mt cfr China this week.
Most mills and exporters are waiting for price direction in January before confirming any scrap deals, while domestic demand is firm as per market participants.
The weekly Davis Index for domestic HMS 1&2 (80:20) rose THB100/mt ($3/mt) to THB10,500/mt ($350/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 THB1,200/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. Due to holidays, mills have slowed purchases. Higher freight charges and a shortage of containers have forced mills to procure domestic scrap, however, domestic supplies too are inadequate and adding to the price rise this week.
The weekly indexes for HMS 1&2 (80:20) rose by MYR138/mt and MYR125 ($31/mt) to MYR1,388/mt ($342/mt), and MYR1,420/mt delivered western mills and eastern mills, respectively, inclusive of taxes on global cues. 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; VND23,219; KRW1,094)