Most Asian mills opted for domestic ferrous scrap this week amid wide disparity between imported and domestic prices. With Turkish bids for US-origin HMS 1&2 (80:20) largely flat, traders expect imported scrap prices to gain some stability. They indicated that many yards are not inclined to sell at lower prices and prefer to wait.
South Korean domestic ferrous scrap prices trended down this week. Suppliers reduced offer prices to match lower bids placed by mills. In the export market, many mills focused on buying domestic material and Japanese scrap amid container shortage and vessel delays.
Hyundai Steel booked 45,000mt of Japanese scrap on a fob basis on Wednesday. The steelmaker is trying to negotiate at even lower prices this week, said traders. Last week, bids for #2 HMS heard at JPY 39,500/mt fob.
The Davis Index for domestic Heavy A fell by KRW15,000/mt and KRW35,000/mt, respectively to KRW425,000/mt and KRW415,000/mt($376.4/mt) delivered Incheon and Pohang, respectively. Mills could reduce their bids for domestic scrap next week. But the decline is expected to be lesser than that in the seaborne market amid tightening domestic supplies.
The weekly Davis Index for domestic Light A fell by KRW30,500/mt at KRW392,000/mt delivered Pohang mill. Trades for the grade heard at KRW400,000-410,000/mt on Monday. Domestic scrap suppliers are expecting smaller mills to purchase this week before their scheduled 10-15 day maintenance in February. Demand is expected to fall until Lunar New Year as mills with high inventory and scheduled maintenance stay away from the market.
Tokyo Steel reduced its ferrous scrap purchase price for the fourth time in January. Tokyo Steel lowered #2 HMS purchase prices by JPY2,000/mt ($19/mt) to JPY36,000/mt del plant Utsunomiya and JPY1000/mt to JPY41000/mt del Tahara, effective Jan 26. Bids for other three works remain unchanged for #2 HMS at JPY40,500/mt del Okayama, JPY40,000/mt del plant Kyushu, JPY40,000/mt del Takamatsu.
South Korean, Taiwanese and Vietnamese mills are expected to reduce ferrous scrap bids in line with the fall in Japanese domestic scrap prices. Traders indicate that domestic finished steel demand in Japan remains sluggish due to which scrap exporters would focus on China as offers fall to $470/mt cfr.
Japan’s crude steel production in 2020 fell by 16.2pc to 83.19mn mt from prior year due to the pandemic amid subdued demand from automobiles and construction sectors, according to Japan Iron and Steel Federation data.
The Davis Index for containerized US-origin HMS 1&2 (80:20), Monday, settled at $396/mt cfr Taiwan, down by $13/mt. Some offers heard at $400/mt cfr down by $15/mt, while bids heard at $390-395/mt.
On Monday, offers for HMS 1&2 (90:10) from Central America in FEU heard at $410/mt cfr, while bids at $390-395/mt. Taiwanese importers indicated that domestic scrap prices are still cheaper than imported. Mills claim offers are unviable amid sluggish finished steel demand as many infrastructure projects are stalled due to harsh winter. Steelmakers expect a further decline in Turkey’s overseas buying prices. The Turkish Index for US-origin HMS 1&2 (80:20), Monday, fell by $14/mt from Friday to $457.5/mt cfr.
On Monday, Feng Hsin Steel reduced rebar and ferrous scrap prices by TWD800/mt ($28.57/mt) and TWD500/mt for February deliveries. After the revision, the steelmaker’s base price for rebar fell to TWD18,100-18,200/mt ex-southern mills.
The weekly Davis Indexes for domestic HMS 1&2 (80:20) fell by TWD500/mt to TWD10,950/mt ($390.95/mt) and TWD11,200/mt delivered South Taiwan and North Taiwan mills, respectively.
The weekly Davis Index for HMS 1&2 (80:20) fell by VND16,667/mt ($0.7/mt) this week to VND8,500,000/mt ($369/mt) delivered South Vietnam inclusive of taxes. Sluggish finished steel demand impacted ferrous scrap prices in Vietnam. Mills reduced bids for domestic scrap on global cues. A few deals for HMS 1&2 (90:10) heard at VND8,60,0000/mt delivered South Vietnam on Tuesday.
In bulk, offers for Japanese HMS 1&2 (50:50) fell by $5/mt to $425/mt cfr on Monday. Deals heard at $430/mt cfr last week.
In China, Shagang Steel’s ferrous scrap purchase prices fell by CNY5/mt ($0.76/mt) on Monday from the prior week. Semi-finished steel prices fell due to sluggish demand for finished steel and production cuts due to pollution. Iron ore prices, on the other hand, were flat on Monday from Saturday at $168.5/mt, while were down by $4/mt on Friday from the prior week. Prices are likely to stabilize after Chinese New Year as demand rises and inventories fall.
Traders overseas expect Chinese demand for ferrous scrap to sustain in February after Japanese scrap offers were reduced to $465-470/mt. They indicated the current offers will be viable as the difference in domestic and imported scrap contracted to $15-20/mt from $50-60/mt in the first week of January. No small bulk deals heard this week but Japanese exporters expect increase in purchases after Chinese New Year.
The weekly Davis Index for the HMS 1&2 (80:20) fell by CNY5/mt at CNY3,225/mt ($497/mt) delivered mill. Deals for P&S 5ft heard at CNY4,050/mt this week. The market was bearish due to limited buying, cold weather, rising COVID-19 cases and elevated steel inventories.
On Tuesday, prices for Q235 150mm square billets in Tangshan rose by CNY20/mt to CNY3,830/mt ex-works including 13pc VAT from the prior week. Southeast Asian billet export offers were under pressure with buyers from the Philippines bidding at $580/mt, while offers were at $600/mt this week.
The weekly Davis Index for domestic HMS 1&2 (80:20) was flat THB11,500/mt ($383/mt) delivered Rayong mill inclusive of taxes, amid limited deals and weak global cues. Steel mills are expected to raise bids as they restock scrap inventory in anticipation of a rise in steel demand in February. Several infrastructure projects are expected to commence following a drop in COVID-19 cases.
Container shortage and vessel delays added to the woes of steel mills interested in short transit imports. Deals for HMS 1, P&S heard at THB12,400/mt and THB12,600/mt, respectively, on Monday. A leading Thai steelmaker is expected to raise HMS 1&2 (80:20) price next week by THB500-700/mt.
The weekly indexes for HMS 1&2 (80:20) rose by MYR105/mt ($26/mt) and MYR100/mt to MYR1,520/mt ($375/mt), and MYR1,550/mt delivered western mills and eastern mills inclusive of taxes, respectively.
Malaysian steelmakers also raised bids on Monday in anticipation of a rise in steel demand post Lunar New Year holidays and amid fear of domestic scrap shortage. Mills preferred competitively-priced domestic scrap over imports due to vessel delays and higher freight rates. Importers are closely watching Turkish and Chinese scrap purchases ahead of new bookings.
($1=JPY104; TWD28; CNY6.5; THB30; MYR4; VND23,047; KRW1,102)