- Global scrap prices continued to drop this week in the face of uncertainty brought about by COVID-19 containment policies. Worldwide scrap prices have been affected not only by short-term soft demand directly correlated with interim operational interruptions but also by the ensuing uncertainty resulting from a myriad of national quarantine policies disturbing previously predictable trade flows/transactions.
- Yards in the UK, Europe and US have lowered processing rates and collections; mills are taking outages to ape auto production shutdowns; and while most of the world struggles with capacity cutbacks China is on the rise. This has left some worried about what impact China might have on global steel markets if it opens the export floodgates. One market participant raised an interesting question: with scrap markets depressed does it become attractive for China to book bulk scrap and keep its melting costs down relative to iron ore. Given the current weak demand from other Asian countries and the amount of supply on offer from Japan and USWC; it’s certainly a decent question to raise.
- The situation is gravest in India where a majority of Indian furnaces canceled orders on material that has already arrived at the ports by claiming force majeurs. To make matters significantly worse for the traders that imported material, India’s ports have been shut by its government amid a 21-day lockdown across the country. The industry estimate is that 150,000-200,000 containers have or will arrive at Indian ports during this 3-week window and without shipping lines offering waivers on detention charges until such time that ports can clear backlogs (mid-May at the earliest) India’ importers face their biggest crisis since 2008.
- As always, we’ll do our best to stay on top of all this and report it on our platform as soon as we confirm new trade.
- – Sean Davidson
Without further ado, here’s this week’s ferrous summary taken from our global coverage over the past week:
The daily Davis Index for Turkish imports of US-origin HMS 1&2 (80:20) dropped to $207.50/mt cfr on Friday, down from $245/mt the prior Friday.
There were just two confirmed bulk sales this week; one to Turkey and one to Egypt; but some market participants feel at least three more cargoes were booked this week on the quiet.
Turkish domestic and export rebar sales are sluggish. The weak demand led to three mills in Izmir reducing rebar production. Some small re-rolling companies also decided to suspend operations. Some maintenances planned for April in Iskenderun.
Local rebar spot prices settled in a range of TRY2,880-2,980/mt ex-works, including 18pc VAT, on Friday.
Export rebar prices remain at $395-400/mt fob in Turkey with no sales reported this week.
Export billet market at $345-350/mt fob, saw some activity.
CIS: Pig iron prices drop on sales to China
- The weekly Davis Index for CIS basic pig iron decreased by $14/mt to $297/mt fob Black Sea on Friday, as sales to China were reported.
- CIS pig iron sold to several Chinese buyers at $325-333/mt cfr for late May shipment.
- Activity in the Italian pig iron market has been non-existent as it remains under strict lockdown. As a result, the weekly Davis Index for the CIS pig iron in Italy is based on current fob prices and decreased by $10/mt to $323/mt cfr on Friday.
- The Davis Index for pig iron into New Orleans fell by $30/mt this week to $323/mt cfr.
EU: Spain, UK small bulk prices sink
- Davis Indexes for UK small bulk HMS 1&2 (80:20) and shredded ferrous scrap decreased to €135/mt ($154/mt) fob and €140/mt fob, respectively, on Friday as demand retreated.
- Following the closure of many European steel mills, particularly EAFs UK-based small bulk exports have been left with little option but to sell parcels to north European traders for transshipment to destinations further afield.
- Some UK-based ferrous scrap processors with deep-sea terminals, have diverted some material to alternative destinations such as South and Southeast Asia.
- The Davis Index for northern Spain HMS 1&2 (80:20) decreased €180/mt cfr while the index for shredded ferrous scrap dropped to €185/mt cfr. (€1 = $1.099)
US: Dock prices drop significantly (March 24)
- US East Coast dock collection prices for ferrous scrap declined by $37-58/gt across all grades and dock locations on Monday, 24 March, amid reduced export activity for a fourth straight week.
- The weekly Tuesday Davis Indexes for export yard buying prices in New York for HMS 1&2 (80:20) declined by $56/gt from $194/gt to $138/gt delivered and decreased by $56/gt from $204/gt to $148/gt delivered New York dock for P&S 5ft. The index for shredder feed dropped by $42/gt from $144/gt to $102/gt delivered.
- The prices for HMS 1&2 (80:20) have dropped by about $80/gt since March 10 depending on dock.
- Dock prices in Houston, San Francisco and Portland declined in the latter part of the week while Los Angeles continued trending flat. Developments within the latter part of the week will be incorporated into Tuesday’s (March 31) weekly Index computations.
- Houston dock prices fell by an additional $45/gt by Thursday and some transactions are now at $100/gt for shredder feed, $115/gt HMS 80:20, and $140 P&S.
- In San Francisco, dock prices for HMS 1&2 (80:20) were down to $146/gt with sellers concerned of further price erosion on limited sales to Asia.
- Prices also dropped in the Portland area on Friday. Some sellers reported delivered dock prices for HMS 1&2 at around $163/gt. The weekly Davis Index in early part of week for HMS 1&2 (80:20) was at $167/gt.
US domestic ferrous scrap trending down for April
- Market opinions for domestic April trade in the US are wide at down $40-80/gt compared to March settled prices with the predominant consensus near $50/gt—with some variances based on grade and region.
- April scrap supplies will see substantially fewer prime grade volumes as automotive/industrial facilities suspended production.
- While scrap yards reported less incoming material on lower scale prices, some yards in the Midwest, and possibly elsewhere, have used state guidelines to decline buying from peddlers.
- A variety of mills have maintenance shutdowns scheduled for April which are being weaved into shutdown periods but may be extended on soft demand.
- Many have already cancelled pending scrap deliveries for March.
- Automotive industry players announced opening of operations in mid-April which should bring some reprieve to steel markets. However, there are some that feel that if the US fails to flatten the virus’ curve, the country might have to relent and announce more drastic measures to contain community spread. Should this happen, manufacturers may have no choice but to extend outages. These are extremely uncertain times.
- Market participants in structural steel material encountered strong shipping weeks in March along with requests for accelerated deliveries over the next four weeks. This should support strong production at some mills in April. However, the booking trend by distributors for orders into May and June has also been characterized as one of the “worst booking weeks in recent history,” which points to potential holes in supply and demand unless end customers get confident about proceeding with projects.
- OCTG/Tubular demand weakened further on low oil prices. Tenaris and US Steel announced layoffs in the corresponding divisions.
Mexico: Ferrous scrap prices rise in the north
- Mexico domestic ferrous scrap prices increased in the north but declined in the country’s southern region. Market participants expect domestic ferrous scrap prices to rise further in North Mexico. The peso is facing devaluation against the dollar. ($1= MXN23.36)
- In northern Mexico, the weekly Davis Index for HMS 1&2 (80:20) rose by MXN250/mt to MXN5,700/mt ($244/mt) delivered consumer on Friday. The index for machine shop turnings increased by MXN200/mt to MXN4,600/mt delivered and rose for #1busheling by MXN250 to MXN5,700/mt delivered. The index for P&S 5ft in the north increased by MXN300/mt to MXN5,600/mt delivered consumer.
- The Davis Index in the Bajío region increased by MXN100/mt to MXN5,450/mt delivered Mexico consumer for HMS 1&2 (80:20), while it decreased by MXN275/mt to MXN4,625/mt delivered for machine shop turnings. The index for #1busheling rose by MXN150/mt to MXN5,625/mt delivered and moved up by MXN25/mt toMXN5325/mt delivered for P&S 5ft.
- In the central region, the index declined for all grades, dropping by MXN200/mt to MXN5,300/mt delivered Mexico consumer for HMS 1&2 (80:20) and by MXN400 to MXN4,500/mt delivered for machine shop turnings. The index for #1 busheling in Central Mexico fell by MXN200/mt to MXN5,400/mt delivered on Friday and declined by MXN250/mt to MXN5,400/mt delivered for P&S 5ft.
- The weekly Davis Index for containerised US-origin HMS 1&2(80:20) settled at $214/mt cfr Taiwan on Thursday, down by $9/mt from the prior week. US-origin HMS 1&2 (80:20) concluded at $215-220/mt cfr Taiwan early in the week and subsequently dropped to a $210-213/mt cfr by Friday.
- The weekly Davis Index for domestic HMS 1&2 (80:20) in south Taiwan settled at NT$6,450/mt ($214/mt) del plant Tuesday, down by NT$50/mt. The weekly index for HMS 1&2 (80:20) in north Taiwan settled at NT$6,650/mt del plant, down by NT$100/mt. Mills paid NT$6,200-6,400/mt for domestic HMS 1&2 (80:20) delivered in the south.
- Drop in global billet prices in Russia on Ruble depreciation and in Iran sent billet prices in Southeast Asia below $400/mt cfr levels this week.
- Japanese HMS 1&2 (50:50) in small bulk cargoes traded at $230/mt cfr Taiwan in the early week. The same grade was offered at $220-225/mt cfr Taiwan late week.
- In the domestic steel market, Feng Hsin steel offered rebar G-40 at NT$14,800/mt ex producer but trades after discount were at $14,000-14,200/mt ex producer in the early week. On March 28, the steelmaker lowered these prices by an additional NT$300/mt.
- A southern Vietnam mill booked an Australian bulk cargo comprising 10,000mt HMS 1&2 (80:20) at $248/mt cfr Vietnam. Northern mills booked 5,000mt each of Japanese #2 HMS at JPY21,000-21,500/mt fob Japan or equivalent to $235-240/mt cfr Vietnam, down $5-10/mt from the prior week.
- Japanese P&S equivalent scrap (HS) in small bulk cargoes traded at $258-260/mt cfr North Vietnam, down $10/mt from the prior week.
- Bids for Japanese #2 HMS and Busheling were reported at $225-230/mt and $250-255/mt cfr Vietnam but failed to find suppliers at those levels. Suppliers offered $265/mt cfr Vietanm for busheling.
- Hong Kong-origin bulk HMS 1&2 (50:50) was offered at $233-235/mt cfr Vietnam. The Davis Index for containerised P&S 5ft settled at $245/mt cfr Vietnam, down by $9/mt from the prior week.
- A mill based in north Vietnam booked US-origin P&S in 40ft containers at $235/mt cfr Vietnam. US-origin HMS 1&2 (80:20) was offered at $225-228/mt cfr Vietnam with no takers.
- Domestic – The weekly Davis Index for HMS 1&2 (80:20) delivered South Vietnam settled at VND5,550,000/mt ($239/mt) inclusive of taxes, down by VND250,000/mt.
- Trades for #2 HMS concluded at JPY21,000-21,500/mt fob Japan in this week. Bids dropped to JPY20,500-21,000/mt fob following oversupply situation and tumbled global ferrous scrap prices.
- US-origin containerised shredded offered at $230-235/mt cfr South Korea, down by $10/mt.
- South Korean domestic ferrous scrap prices dropped in line with successive price cuts by KRW10,000-15,000/mt announced by leading steel mills. Another round expected next week.
- The weekly Davis Index for domestic Light A settled at KRW235,000/mt delivered Pohang plant, down by KRW7,500/mt from the prior week. Domestic Heavy A del Incheon traded KRW255,000-262,500/mt and KRW245,000-252,500/mt del Pohang.
- South Korean automakers announced production halts in India and Italy.
- Japanese ferrous scrap export prices fell by JPY1,250-1500/mt ($11-14/mt) this week on growing supply and persistent weak demand in the domestic market.
- Japanese suppliers lowered billet prices to Southeast Asian buyers and Manila-based buyers amid a lockdown in Philippines.
- Automakers like Toyota and Ford announced production cuts in Japan. Toyota will stop its seven production lines from April 3 to April 13 with the risk of a longer extension as COVID-19 outbreak impacted the demand negatively from importer countries.
- The weekly Davis Index for #2 HMS settled at JPY20,750/mt ($187/mt) fob Japan on Wednesday, down JPY1,250/mt. The Davis Index for Busheling settled at JPY23,250/mt ($209/mt) fob Japan on Wednesday, down JPY1,500/mt from the prior Wednesday.
- For Japanese HMS 1&2 (50:50) in small bulk cargoes bids were at $225-230/mt cfr Taiwan and $230-235/mt cfr Vietnam, down $10-15/mt.
- Japanese HS and busheling scrap in bulk cargoes was offered at $240-245/mt and $255-260/mt cfr Vietnam.
- The Davis Index for #2 HMS settled at JPY20,000/mt fas Tokyo Bay, down JPY1,250/mt from the prior week, with shredded and HS at JPY22,500-22,750/mt fas, down by JPY1,000/mt.
- After keeping prices unchanged since March 13, Tokyo Steel lowered its ferrous scrap purchase prices by JPY500/mt at all five works effective March 28. Prices for #2 HMS dropped to JPY17,500/mt ($162/mt) del Kyushu plant while #2 HMS in Utsunomiya, Tahara, Okayama and Takamatsu were at JPY19,000/mt, JPY20,000/mt, JPY18,500/mt and JPY17,500/mt, respectively. Bids for Busheling remained at JPY22,000/mt del Tahara and JPY21,000/mt del Utsunomiya.
- The Davis Index for containerised HMS 1&2 (80:20) settled at $234/mt cfr Jakarta, down by $6/mt from the prior week.
- US-origin P&S in 40ft containers was offered at $265/mt cfr Jakarta. But with bids at $245/mt cfr Jakarta no deals materialized. Offers for containerised shredded were at $255-260/mt cfr Jakarta, down by $12-15/mt from the prior week. The weekly Davis index for busheling scrap settled at $270/mt cfr Jakarta, down by $10/mt.
- Domestic – Indonesian mill offered 4sp billet at $380-385/mt cfr Southeast Asia, down by $5/mt from the prior week. Domestic heavy melt scrap was priced at $230-235/mt del Indonesia mill, down by $15-20/mt from the prior week.
- The weekly Davis Index for domestic HMS 1&2 (80:20) del Rayong settled at THB8,100/mt ($247/mt), down by THB600/mt ($18/mt) inclusive of taxes Tuesday. Prices dropped further to THB7500-7700/mt ($230-235/mt) del Rayong late in the week.
- Malaysia’s government has suspended mining activities to control the spread of COVID-19. A drop-in iron ore supply could create demand for ferrous scrap in the near term if finished steel demand picks up in the country.
- Seaborne imported scrap prices in Pakistan tumbled by $20-30/mt this week. Another $20-30/mt drop is on the anvil which would take prices to their lowest since 2015.
- The weekly Davis Index for containerized shredded dropped by $25/mt to settle at $256/mt cfr Port Qasim on Friday. Early this week, trades for containerised shredded concluded at $255-260/mt cfr Qasim. Bids from buyers subsequently fell below $250/mt cfr Qasim. A few transactions were heard in the range $245-250/mt cfr Qasim late in the week before markets and major mills shut. P&S 5ft in containers offered at $265-270/mt cfr Port Qasim, down by $15-20/mt from the prior week.
- Pakistan has banned imports of scrapped ships at its Gadani’s recycling yards, but vessel movement into Port Qasim continues.
- Almost 95pc of small and medium scale steelmakers have turned off their furnaces in Sindh and Karachi to adhere to the country’s lockdown.
- The weekly Davis Index for commercial Bala billet settled flat at PKR87,500/mt ex-yards Punjab inclusive of local taxes. Prices for G-60 billet and G-60 rebar were at PKR93,250/mt and PKR108,500/mt ex-Karachi and PKR107,500/mt ex-Punjab plant before country’s lockdown.
- Domestic scrap equivalent to shredded offered at PKR67,250/mt and mixed HMS and P&S scrap at PKR66,500/mt del mills. ($1=PKR161.5)
- Bangladesh steel mills went quiet this week amid a lockdown. Chattogram’s port authority enforced 14 days of quarantine for containers arriving from affected regions and the cargo movement ground to a sudden halt.
- The Davis Index for containerized shredded scrap settled at $260/mt cfr Chattogram on Friday, down $24/mt from the prior week. At the start of the week, containerized shredded prices were at $260-265/mt cfr Chattogram, but dropped to $250-255/mt on Wednesday before halting completely.
- Containerized P&S settled at $265-270/mt cfr Chattogram on Friday, down by $22-25/mt from the prior week.
- The Davis Index for US-origin containerized HMS 1&2 (80:20) declined to $248/mt cfr Chattogram, from $265/mt in the prior week. Brazilian traders lowered their offers to $245-250/mt from $260-265/mt levels to spur some sales but not a lot was booked.
- The Davis Index for domestic ship-breaking HMS 1&2 (80:20) settled at BDT28,500/mt inclusive of local taxes ex-yard Chattogram on Friday, down by BDT1000/mt ($12/mt) from the prior week. Bangladesh shipbreaking activities completely stopped after closing of all operations due to the lockdown.
- Indian imported ferrous scrap market was disrupted by a sudden announcement of an immediate 21-day lockdown which sent the country’s steel production at induction and electric arc furnaces from 80% to under 25% in less than 3 days. Several have fully shut melting.
- US suppliers opted to halt the containers loading set for India, Pakistan and Bangladesh on logistics and banking risks.
- The Davis Index for containerised shredded, P&S 5ft, Turning and Busheling settled at $258/mt cfr, $265/mt, $225/mt and $270/mt cfr Nhava Sheva, respectively, down by $20-25/mt from the prior week.
- Depending on origin and quality containerized HMS 1&2 (80:20) was offered at $240-265/mt cfr Indian ports with no takers in the market.
- The daily Davis Index for HMS 1&2 (80:20) settled at Rs20,150/mt ($267.8/mt) del Mandi Gobindgarh on Friday. The daily index for sponge iron was at Rs20,000/mt del Mandi Gobindgarh.
- In Mumbai, mills remain shut. The daily index for HMS 1&2 (80:20) settled at Rs22,450/mt del mills Friday and the index for sponge iron was at Rs17,900/mt del mills.
- The daily Davis Index for rebar settled at Rs31,200/mt ($415.33/mt) ex-works Raipur on Friday. The daily index for billet was at Rs26,500/mt ($352.76/mt) ex-works Raipur.
- In Mumbai, the daily index for rebar was at Rs33,400/mt on Friday in the absence of trade. The daily Davis Index for billet in Mumbai settled at Rs28,700/mt ex-works.
- In Mandi Gobindgarh, the daily index for ingot was at Rs29,800/mt ex-works on Friday. ($1= Rs75.12)
- The weekly Davis Index for domestic HMS 1&2 (80:20) settled at CNY2,500/mt ($354/mt) inclusive of 13pc vat delivered to mill in eastern China, down by CNY15/mt.
- Shagang Steel continued lowering its domestic scrap procurement prices to balance excess supply of ferrous scrap. Purchase prices were dropped amid an increase in finished steel prices. Shagang is paying CNY2,610/mt for HMS 2 and CNY2,660/mt for HMS #1 to domestic suppliers, including delivery and the 13pc VAT.
Davis Index’s weekly north and south UK dock collection prices of HMS 1&2 (80:20) ferrous scrap prices dropped down to £97/mt & £86/mt, respectively, on March 24, from recent highs of £156/mt on March 3.
- Several yards are open for business with some exceptions and stringent manual handling restrictions in place, and a few have temporarily closed all sites to external collections and deliveries.
- UK dockside prices have fallen much faster than major seaborne benchmarks.
Most domestic German ferrous scrap grades rose by €14/mt following the conclusion of monthly negotiations in early March, as mills had to pay up to secure material achieving higher prices in export markets.
More recently, however, local collection prices have fallen by €30-50/mt and many steel mills (domestic & overseas) have reduced output/temporarily idled plants, so the market expects to see significant declines in April demand & domestic scrap prices for those mills that are still able to buy.
Davis Index’s monthly Spanish ferrous scrap indices dropped by €20/mt in early March with virus outbreak more prevalent in the country than others in northern Europe at that point in time.
Since then, however, Spanish mills withdrew all bids for short sea bulk with no fresh deals heard since the first week of March.
Europe (March 24)
- The weekly Davis Index for ARAG HMS 1&2 (75:25) fell by €30/mt ($32/mt) to €150/mt delivered dockside on Tuesday, March 24, amid a bearish outlook and a challenging export sales market.
- Most Dutch and Belgian ferrous scrap exporters continue to reduce dockside prices as demand remains stagnant and prices decline quickly in the global market. According to market participants, inflow of the material decreased from 30pc to 80pc depending on yards and negatively affected scrap collection in Europe.
Russia (March 23)
- The weekly Davis Index for HMS 1&2 (80:20) or A3 scrap in Russia’s Baltic Sea region decreased sharply by $34/mt to $200/mt fob on Monday, March 23, while the index declined even more in the Black Sea region—by $52/mt to $193/mt fob.
- Ferrous scrap export offers from Russia to Turkey are suspended due to extremely weak demand and buyers’ expectation of lower prices.
- Since the downtrend in Russia’s ferrous scrap export market accelerated, collection prices have fallen. The weekly Davis Index for HMS 1&2 (80:20) or A3 scrap decreased by Rub1,000/mt ($12.50/mt) in St Petersburg dock to Rub13,900/mt delivered on Monday, and by Rub300/mt ($4/mt) in Rostov-on-Don dock to Rub13,750/mt delivered. ($1 = RUB79.85.)