Positive activity remains only in the Chinese scrap market, while the Turkish and American markets counteract the negative factors
World scrap prices continued to rise last week, although growth slowed significantly and the outlook worsened. The exception is the Chinese scrap market, which continues to recover amid an improving situation in the steel market.
Scrap prices in Turkiye and for the week of June 5-12, 2023, increased by 0.5%, or $2/t compared to the previous week – to $387-390/t. Thus, raw material quotations have been increasing for the third week in a row, although the rate of growth has slowed down significantly, which indicates a suspension of activity in the market.
Scrap on the Turkish market almost stopped rising in price last week, as the supply of raw materials increased significantly, while steel mills reduced purchases. At the same time, prices are still supported by the accelerated devaluation of the lira, although this factor forces plants to trade cautiously and not purchase large volumes of raw materials.
Currently, Turkish buyers buy scrap from USA, EU and Baltic suppliers. In addition, there is scrap on the domestic market, which is collected in the places of debris left after the earthquake. Such cargoes are mainly sent to steel processing plants in the south of the country and are used for mixing with normal grades of raw materials.
Amid this, a sufficient number of offers for scrap and a slowdown in sales of rebar on the domestic market, the interest of Turkish mills in purchasing raw materials has decreased. As access to credit remains problematic and the lira continues to depreciate, activity in the steel market will decrease, weighing on scrap prices in the near term.
On the USA market in the week of June 2-9, 2023, scrap prices increased by 3% compared to the previous week – up to $363-371/t. At the same time, the forecast price for June 16 is 365-368/ton.
Last week, US scrap prices were supported by rising prices in Turkiye, but the start of domestic trading on June 7 is likely to drag prices lower amid lower steel prices and an excess of supply over demand. Such expectations were previously assumed by market participants.
Initial bids from US mills were $40-60/t off May prices for crushed and premium scrap, depending on the region. Compared to the May contracts, the price level for the cut grade of raw materials fell by $30-45/t.
Taiwanese buyers have shown little interest in US scrap supplies amid lower steel prices and lower domestic scrap prices.
Scrap prices in China for the past week increased by 1.5% compared to the previous week – up to $392.92/t. Positive dynamics are supported by the steel market.
During the week of June 2-9, 2023, the capacity utilization level of factories operating on electric arc furnaces increased by 3 p.p. compared to a week earlier – up to 48%. Average daily scrap deliveries to all steel enterprises of the country increased by 29.9% – up to 510.7 thousand tons, and average daily consumption increased by 1.9% – up to 456.1 thousand tons.
Demand for scrap steel among Chinese steelmakers rebounded significantly last week amid increased mill profitability. At the same time, the increase in prices led to the rapid recovery of supplies of raw materials to the market, although even a week ago the supply did not cover the demand. Given the low seasonal supply of scrap in the summer, prices will rise in the short term.
As GMK Center reported earlier, Ukraine in January-May 2023 increased the export of scrap by 3.1 times y/y – up to 77.5 thousand tons. Scrap production decreased by 33.5% y/y – up to 444.3 thousand tons. Scrap supplies to Ukrainian steel plants decreased by 44.3% y/y – to 345.7 thousand tons.