EU – CIS, Market Review, Metals Market

Thus, in the end point of the fall HMS No 1&2 scrap prices at the supply from West to Turkey and Black Sea A3 scrap were USD 200 per tone to USD 210 per tone CFR, and semis from CIS were supplied to Turkey at USD 280 per tone to USD 300 per tone FOB. Turkish companies decreased rebar prices to USD 380 per tone to USD 390 per tone FOB. In three weeks passed from that time semis and rebar prices grew by USD 60 per tone to USD 70 per tone to about USD 350 per tone to USD 360 and USD 450 per tone to USD 460 FOB correspondingly. At the same time scrap quotations increased by USD 25 per tone to USD 30 per tone. In the first week of April US and Russian A3 scrap HMS No 1&2 reached in Turkey maximum USD 230 per tone CFR.

Similar scale increase was in Eastern Asia where HMS No 1&2 grew from USD 210 per tone to USD 220 to USD 230 per tone to USD 240 per tone CFR. Japanese scrap quotations changed almost the same way.

Current market trends objectively contribute to scrap prices increase after semis and long products. But in the middle of March semis and rebar quotations were undervalued comparing to scrap. Now the difference between raw materials and finished products grew to middle level. Nevertheless, even though construction steel prices increase does not end in the nearest weeks, scrap suppliers will hardly achieve similar quotations increase for their products.

Usually scrap prices fall in spring due to seasonal factors. However, in current year the situation is somewhat different. Scrap collection volumes fell acutely last autumn and do not grow yet due to low prices. According to Italian traders’ estimations European market now is balanced and the demand is almost equal to the supply. However, if loading level of electric steelworks increases even to 60% comparing to current 40% to 50%, raw materials deficit will begin. Similar situation is in Russian and Ukrainian markets for last months.

At the same time the significance of these factors is depreciated by the total weakness of demand, first of all, in USA. Unlike Europe and partly, Japan, where some balance in scrap market has been reached; there is still the problem of surplus in US market. Many local traders have significant scrap stocks which do not find demand neither inside nor outside the country. Load of production facilities in metallurgy decreased to less than 50 %, steel making companies keep form new purchases.

At the same time export opportunities are limited. Chinese metallurgists almost left the market in the end of March and demand level in Turkey remains low: local companies do not believe in long-term increase in long products market and do not invest into raw materials purchases. US analysts think that in the middle of April Turkish companies will give up scrap import and will return to the market in late May early June.

In this connection there is a kind of unstable balance in world scrap market. Opportunities for prices increase are worked out the demand is weak, excessive supply in USA puts pressure on the market. Nevertheless, due to scrap resources limitation, in other regions serious prices decrease in April to May does not look possible as well.

Source: Metall Market