London September 17 2022: Near term scrap futures contracts on the London Metal Exchange saw losses over the week to Sept. 15, while weekly trading volumes decreased.
Platts, part of S&P Global Commodity Insights, assessed the September contract down $7/mt on the week to $358/mt, while October dropped $12/mt to $347/mt. The November contract fell $11.50/mt to $352/mt, while December was down $3.50/mt at $355/mt.
The backwardation over the September-October portion of the curve strengthened, suggesting some futures traders still expected scrap prices to soften in the physical market in the near term.
The October-December portion of the forward curve shifted into a soft contango, suggesting expectations of price stabilization and a slight uptrend deeper into the fourth quarter.
Spot prices for physical imports of premium heavy melting scrap 1/2 (80:20) fell $19.50/mt week on week to $349/mt CFR Turkey Sept. 15, following lower sales on concerns over scrap demand amid rising mill production costs. Buyers and sellers remained divided in their ideas for workable levels over Sept. 14-15 prompting a pause in activity.
“Nobody sells into Turkey at the numbers aimed by the big Turkish mills and slowly, cargoes are moving away,” the EU-based trader said. A number of recyclers pointed to alternative bulk scrap demand from India, Bangladesh and Latin America, but not all deepsea suppliers were able to sell to those markets.
“Recyclers don’t want to send a signal to Asian buyers that Turkish scrap prices are moving down as then Far East mills could stop buying, as they watch Turkey for a signal,” one Turkish mill source said. “We’re not looking for anything now — we just want to see some finished steel demand so there is a pause in activity.”
Weekly LME scrap futures trading volumes over the week to Sept. 15 totaled 100,470 mt, down from 110,600 mt for the week ending Sept. 8.
Near-term rebar futures contracts also saw strong losses over the week to Sept. 15.
Platts assessed the September contract down $14/mt on the week to $661.50/mt, with October falling $29.50/mt to $645.50/mt. The November contract lost $13/mt to $647/mt, while December decreased $11/mt to $643.50/mt.
The near-term backwardation over the September-October portion of the forward curve strengthened significantly on the week, while the backwardation over September-December softened slightly, suggesting that futures traders still expected prices in the physical market to soften in the near term.
Turkish physical rebar export prices weakened $5/mt on the week to $670/mt FOB Sept. 15, as buyers continued to resist higher offers from Turkish rebar exporters. Mills tried to maintain elevated levels following a recent hike in energy costs Sept. 1, despite lower scrap prices as market sources were expecting further increases in energy prices in the near term.
“There are rumors about more energy hikes in upcoming months,” one Marmara mill source said. “So mills are reluctant to give discounts.”
The source noted that even stockists had increased offers for rebars in the domestic market above $650/mt EXW, as they were unable to book rebar at lower levels. However, mills in Iskenderun and Izmir were heard attracting some domestic sales by cutting prices to $660-$670/mt EXW.
Rebar futures weekly trading volumes in the week on the London Metal Exchange totaled 16,470 mt during the week, down from 29,480 mt for week ending Sept. 8.
The daily outright spread between Turkish export rebar and import scrap was assessed at $321/mt Sept. 15, up $14.50/mt on the week.
Elsewhere, Indian scrap futures, which settle basis the Platts CFR Nhava Sheva shredded scrap assessment, traded 180 mt in the week to Sept. 15. The contract has seen a total volume of 7,260 mt traded since its launch in late July 2021.
