It is reported that scrap prices increase in global market, which began in late June 2010, is likely to reach its peak. East Asian and Turkish companies have accumulated the stockpiles for September and October 2010 and thus decreased the purchases volumes and thus affected the prices level.
Far East market is also weak in recent times. Taiwanese, Korean and Vietnamese steel producers decreased the activity in the beginning of September 2010, since they were provided with scrap for several weeks ahead. That is why the US and European suppliers had to make concessions. The price of HMS No 1 in containers decrease by USD 10 per tonne as compared with the end of August 2010 to USD 380 to USD 395 per tonne CFR. Some traders offer bulk HMS No1 at USD 420 per tonne CFR, but real contracts are concluded at USD 410 per tonne CFR.
Domestic prices in Japan also decreased recently. Local steel mills there cut the purchases, since they were well provided with raw materials. Besides, the demand for Japanese scrap abroad also fell. The price for H2 is less than USD 360 per tonne FAS against USD 370 to 377 per tonne FAS in the very beginning of September 2010. Japanese analysts expect the increase of steel output during September 2010 and forecast soon resumption of raw materials prices increase.
Rather stable demand and high prices are in India only. Local steel producers are planning the prices increase in the Q4 and thus are ready to buy exercise raw materials. In China imported HMS № 1 can reach USD 410 to USD 420 per tonne CFR. However, the local market was disoriented by the recent Governmental decision on steel output limitation. From one hand it will cause scrap demand decrease. From the other hand this can cause scrap prices increase due to long products prices increase in the domestic market. According to local Chinese sources scrap price in domestic market recently grew. However, the import volume still remains the same.
The situation in Turkey is also indefinite. The US traders increase the HMS No 1&2 (80:20) price to about USD 405 per ton CFR. But the increase was supported neither by the consumers, nor by the majority of suppliers from Europe and Asia. The price of European HMS No 1&2 (70:30) and Russian A3 are from USD 390 to USD 395 per tonne CFR. It slightly decreased as compared with the beginning of September 2010. The peak of scrap purchases by Turkish companies has already passed and they are provided with raw materials at least till mid October. Thus the activity of this market is unlikely to be high in the nearest weeks.
The decrease of import in Asia and Turkey affected European and the US domestic markets as well. In Southern Europe scrap price in September increased by about EUR 10 per tonne, although larger growth was expected to EUR 30 per tonne. In Italy the price of HMS No 1&2 is EUR 290 to EUR 300 per tonne including delivery. It is unlikely to exceed this level.
In the USA the traders which planned to increase the prices of key grades of scrap by USD 30 to USD 40 per a long tonne had to increase them only by USD 10 to USD 20 per tonne. Some companies could buy raw materials at August terms. The US analysts say that September purchases volume occurred to be much lower than expected. The majority of mini mills in the country still is not going to increase the capacities load and will keep the lowest level of raw materials supplies. The situation in the national construction sector remains dull. In this connection many analysts expect scrap prices decrease in October.
Nevertheless there is no threat of significant fall in scrap market. According to the US traders scrap collecting volumes in the country are still much lower than before the crisis. The income of industrial scrap recovered. However, old scrap collecting volumes are two times less than in 2007. That is why scrap excess is not expected in global in the nearest months. The price will start to grow again as soon as the demand in Turkey, Asian countries, or USA recoveries. It can happen in a month or 1.5.