/Rusmet.ru, Victor Tarnavskiy/ Scrap prices in world market continue to increase in May. First of all, this process influenced Eastern Asia, where American HMS ¹ 1&2 reached $270 per ton and more CFR in containers. When shipping large quantities of scrap in dry cargoes the prices can reach $290 per ton CFR. Japanese H2 scrap is quoted $250-260 per ton CFR in Far East countries; new industrial scrap is quoted up to $270 per ton CFR.
When shipping to Turkey European and American traders try to lead the prices for HMS ¹ 1&2 (80:20) to $260-270 per ton CFR. Russian A3 scrap is offered at $260-265 per ton CFR. But Turkish metallurgical companies do not hurry to accept these prices. The increase in Middle East long products market has not finished yet, however, maximal price of Turkish rebar remains $490 per ton FOB for more than two weeks. Besides, almost all specialists forecast long products demand and prices decrease in the region in late May. In this connection Turkish metallurgists act carefully refraining from big scrap purchases.
After the prices jump in the late April - early May new recession in Europe can start. Scrap price in this market has grew by 10-15 euro per ton having reached, in particular, $250-255 per ton CFR Italy for HMS ¹ 1&2 (80:20) due to rebar prices increasing. Now rebar in the south of Europe decreased again which can cause scrap prices decrease.
At the same time increased demand for scrap in far East can remain in May due to, first of all, Chinese companies return to the market. In Q1 2009 China imported 3.18 mln tons of scrap having exceeded last year figures by more than 5 times. As per Chinese analysts’ estimations, this year China can import more than 10 mln tons of the material. This can be explained by insufficient volumes of domestic collections (this is partially the fault of the government which offered the traders unsuitable VAT refunding system) and rather high prices which reach $330-350 per ton with delivery in eastern provinces. Chinese scrap importers were not active in April; but now they resumed purchasing due to the rise in domestic long products market.
Complex situation is in US scrap market. Domestic demand remains low and is unlikely to rise in nearest months. In this connection many US traders which formerly worked with domestic consumers only, began to switch to export, first of all, to Turkey. Indeed, Turkey bought big quantities of US scrap in April. By the end of April scrap deficit appeared in some eastern districts of USA. US metallurgical companies having almost null scrap stocks, had to agree with prices increase by $40 per ton. In particular, buying prices for HMS ¹ 1 reached $190-200 per gross ton (1016 kg).
In May scrap demand in Turkey will obviously decrease, but Eastern Asia will remain active buyer. Apparently, it will allow retaining world scrap prices from substantial decrease. But, Russian and Ukrainian exporters who are geared to Mediterranean market will have to face sales volume decrease comparing to April.