Scrap prices rose slightly in mid-March

The cost of HMS 1&2 scrap (80:20) in China reached $340/t CFR by mid-March, according to Kallanish. The weekly increase was $2.5/t. Thus, quotes returned to the level recorded at the beginning of the month. Foreign suppliers raised prices in the hope of a seasonal increase in demand for rebar, due to the start of a period of active construction work. Their expectations were not met. The capacity utilisation level of 49 electric steel plants in China in the second week of March fell to 50% compared to 66.9% in the first week of the month.

At the same time, average daily scrap supplies to 255 Chinese steel mills with converter production increased by 1.4% in a week-on-week comparison, to 489.4 thousand tons. Average daily scrap consumption increased by 2.79%, to 516.5 thousand tons. This was unable to revive trade in ports, since Chinese steel mills preferred to buy scrap from local suppliers offering lower prices.

Quotes in Turkish ports from March 6 to March 18 increased from $373.5/t to $381/t CFR. The increase since the beginning of the month was $18.5/t. According to traders, no transactions were made at new quotes this week, since buyers are not ready for the price increase. Steel mills set price targets for European scrap below $375/t CFR and $380/t CFR for American scrap. At the same time, US suppliers are not ready for deals below $385/t CFR.

Demand for rebar in Turkiey remains sluggish, despite the start of the construction season. Therefore, manufacturers’ offers have not changed this week. They remain in the range of $570-595/t EXW.

European scrap prices from March 7 to March 21 increased from $337/t to $355/t FOB Rotterdam. This corresponds to the growth of domestic scrap prices by €15-20/t, which was observed in Italy, France, Luxembourg, Belgium, Germany and Eastern European countries. According to traders, Polish metallurgical plants purchase scrap at higher prices. Therefore, deliveries from the Eastern European region are difficult. At the same time, scrap reserves at metallurgical plants in Southern Europe are estimated as average. This does not allow quotations to rise even more.

From March 7 to March 21, American scrap increased in price from $342/t to $354.5/t FOB East Coast. According to market participants, this trend is unstable, since demand for rebar remains weak. The cost of scrap is being pressured by increased supply from suppliers against the backdrop of more favorable weather conditions. There is already an excess of scrap in the southern United States, one of the traders said.

Raw material prices have failed to respond proportionally to the sharp increase in the cost of finished metal products in the United States. This is due to the fact that the reason for the rise in prices for rebar and other types of rolled products was not growing demand, but government regulation – the introduction of a 25% duty on the import of all metal products.

As reported, in mid-February, American metallurgical companies Nucor and Gerdau USA increased their selling prices for rebar by $40/t. They explained this step by a significant increase in raw material costs.