The international scrap market has seen a colossal gain in the last 45 days despite all the reservations about growth in steel demand. The obvious pitfall being squeezed margins for mills as the downstream demand is still grinding at snails pace.
Towards the culmination of last week it is learnt that Turkish companies received the offers for HMS № 1&2 (80:20) from the U.S. traders at USD325 per tonne to USD 330 per tonne CFR and the prices for Russian, Romanian, and Western European scrap could exceed USD 320 per tonne CFR.
In China the quotations for the U.S. scrap are between USD 340 per tonne to USD 350 per tonne CFR, and Taiwan, Vietnam, and other Far Eastern countries buy this material at USD 320 per tonne to USD 325 per tonne CFR. As compared to the end of November the prices rose by USD 10 per tonne to USD 15 per tonne.
Surely, one of the main reasons for scrap prices increase in global market was scrap prices growth in exporting countries, which were the USA and EU. The US metallurgical companies, which started active scrap purchases in November, caused its prices increase in domestic market by USD 40 per tonne to USD 80 per tonne in 1.5 months. In Europe mills have to pay for scrap by EURO 20 per tonne to EUR 30 per tonne more than in the first half of November. Consequently, exporters compare their offers with domestic prices volume.
However, all these say only about scrap shortage which will worsen in the nearest months. Currently mills in Western world is operating 20-30% below capacity and once this picks up with the onset of spring the demand is likely to go up boosting the prices. It won’t be unfamiliar if the scrap prices touch USD 350 per tonne, CFR levels in the Mediterranean.
At the same time the demand in China will continue unabated as steel output grows which will further the demand for imported scrap.
Obviously, Russian and Ukrainian metallurgists can not avoid further scrap growth. In both countries steel output started increasing again, and the growth is faster than scrap collection. It is possible that in long term Russia and especially Ukraine will turn to scrap net importers.
Although increase in global billet levels is supporting international scrap upsurge and every steel mills is looking to replenish their inventories, future direction for scrap will primarily depend on the price trend of long products in powerhouses of China and Turkey.
India -Steals the show
It is reported that Indian buyers, who lag behind in their bids to buy scrap, have suddenly become active in scrap purchases.
It is reported that some buyers have concluded deals for containerized shredded scrap of EU origin at USD 340 per tonne off late.
However, their bids for HMS 80:20 remain at USD 310 per tonne to USD 325 per tonne.
The main reason for this is the sudden surge in domestic scrap prices, riding piggy bank on scarcity of pencil ingot during the last fortnight.