/Rusmet.ru, Victor Tarnavskiy/ In late October rally signs appeared in Global scrap market. The prices that decreased in September and early October started growth. The analysts say that usual winter increase has already began in the market. The increase usually continues till March. But, by all appearances, the growth will be rather low.
The prices increase at the same time in two key market such as Turkey and Eastern Asia countries. In Far East consumers’ low raw materials stockpiles play an important role. Metallurgical companies from Korea, Taiwan, China, and South-East Asia countries kept from large purchases of scrap in the beginning of autumn. Today they have to start buying despite the weakness of the regional long products market. In Japan there no scrap shortage. However, in the second half of October scrap prices there continue to drop, although at export sales the difference is covered by the Yen to US dollar rate.
Recently the price of Japanese H2 scrap amounted about $360-365 per ton CFR (delivery to Korea) and up to $390 per ton CFR China. The US and Australian HMS № 1&2 prices increased and amount today about $370-375 per ton CFR (deliveries in containers) and up to $390-400 per ton CFR (bulk shipments to China and South0-east Asia). The US traders continue o increase export sales expecting domestic prices increase in November. The US metallurgical companies in September-October also kept scrap stockpiles minimal. Today is the time to refill them.
In Turkey the stockpiles problem is not so acute. In early October Turkish companies purchased scrap in Europe. There was scrap excess in Europe due to long products output redaction. However, after the drop of European HMS № 1&2 (80:20) price to $360 per ton CFR Turkey and lower in mid-October the exporters stopped the supplies. Many companies having sold the excesses material, started to keep the material. According to them the demand for scrap in EU countries stabilized for next months and the collecting volumes will decrease due to winter season.
In the second half of October, the US traders who offer HMS № 1&2 at $375-377 per ton returned to Turkish market. There is no information about the deals yet. However, by all appearances, in November the buyers will have to accept the sellers’ terms. In Middle East long products market prices increase is expected. The demand started growing after a long decrease. Thus it will be easier for steel manufacturers to accept raw materials prices increase.
We should not expect acute increase of scrap metal prices in the nearest weeks. In the foreseeable future Europe will remain the “Achilles’ heel” of scrap. Purchases increase by China is not expected also. Nevertheless, main price trends in Global scrap market will be increasing.