* Steel scrap prices at $418-447 CFR Turkey
* Prices in South East Asia fall $5-10/T in a week
* Scrap swap forward curve in backwardation
By Silvia Antonioli
LONDON, April 14 (Reuters) - Steel scrap prices fell for a fourth week in a row on weak demand from top importer Turkey and as improving weather conditions in the largest exporting countries boosted supply availability.
Steel scrap, a key ingredient for steel products such as billet and rebar, sold at $418-447 per tonne cost-and-freight (CFR) Turkey this week, down from $440-450 per tonne CFR last week.
"Recyclers will have to cut their prices if they want to sell anything," said a European scrap broker.
"The problem is finished products. The steel sale crisis is very serious, and Turkish producers are buying smaller scrap cargoes from the Black Sea at $422 CFR."
Short sea cargoes from neighbouring countries are generally a cheaper source of small volumes of scrap for Turkish producers, while recyclers in the United States and Europe offer higher volumes of material in bigger ships.
Black Sea billet prices have fallen in the past month as political unrest in key importing areas in North Africa and the Middle East has depressed investment in construction and demand for billet. Overproduction is also dogging the steel market, traders said.
Poor sales of steel scrap to Turkey weighed on domestic prices in Europe and the U.S., the main exporting areas.
European domestic prices fell on average $5-15 per tonne, and U.S. domestic prices fell by about $2-3 per tonne from last week, traders said.
Turkish steel mills are likely to come back into the market to buy some more scrap this week or next as many of them are running low on stocks, but whether they will buy volumes high enough to lift prices is not known, a Turkish producer said.
"The only other variable that may move prices up at the moment is China," said a raw materials buyer at an Italian steelmaker.
U.S. recyclers were offering heavy melting scrap (HMS) 1&2 (80:20) at about $435-440 per tonne CFR Turkey, but given the scarce demand from Turkey they turned to China for some sales.
China and South Korea bought 20 deep-sea cargoes of steel scrap at $477-480 CFR in the past two weeks, but this wasn't enough to move prices up, traders said.
ASIAN CONCERNS
Steel scrap prices in South East Asia fell by about $5-10 a tonne on average since last week as demand was weak and the earthquakes and tsunami that hit Japan weighed on sentiment, according to market players.
Japan's government has downgraded its assessment of the economy for the first time in six months to reflect the disaster.
Offers to Taiwan, a major Asian importer, were at $445-450 CFR for heavy melted scrap (HMS) 1 and 2 Taiwan this week, down by about $5-10 per tonne from last week, according to traders.
"The general feeling is that the market is soft and is not getting any stronger," said a steel scrap trader.
"I don't see any factor that could change things at the moment."
However, some were more optimistic, focusing on the fact that reconstruction will start soon in Japan and more steel will be needed.
"It is a bit surprising that the market has not fallen more with all these things going on," a second trader based in the United States said, referring to the events shaking North Africa, the Middle East and Japan.
"This makes me think that despite all, the underlying fundamentals are still sound."
In the over-the-counter steel scrap swaps market, a $10 backwardation -- premium for cash over three month material -- reflected expectations of softening prices in the next few months.
"The view moving forward is still very negative. The sellers don't want to move out of their positions, and there is a lack of conviction on the bid side," said Arthur Worsley, steel derivatives broker at Freight Investors Services.
"I think everybody knows that scrap is going down. The question is: by how much?"
(Editing by Jane Baird, sourced Thomson Reuters)
Steel scrap, a key ingredient for steel products such as billet and rebar, sold at $418-447 per tonne cost-and-freight (CFR) Turkey this week, down from $440-450 per tonne CFR last week.
"Recyclers will have to cut their prices if they want to sell anything," said a European scrap broker.
"The problem is finished products. The steel sale crisis is very serious, and Turkish producers are buying smaller scrap cargoes from the Black Sea at $422 CFR."
Short sea cargoes from neighbouring countries are generally a cheaper source of small volumes of scrap for Turkish producers, while recyclers in the United States and Europe offer higher volumes of material in bigger ships.
Black Sea billet prices have fallen in the past month as political unrest in key importing areas in North Africa and the Middle East has depressed investment in construction and demand for billet. Overproduction is also dogging the steel market, traders said.
Poor sales of steel scrap to Turkey weighed on domestic prices in Europe and the U.S., the main exporting areas.
European domestic prices fell on average $5-15 per tonne, and U.S. domestic prices fell by about $2-3 per tonne from last week, traders said.
Turkish steel mills are likely to come back into the market to buy some more scrap this week or next as many of them are running low on stocks, but whether they will buy volumes high enough to lift prices is not known, a Turkish producer said.
"The only other variable that may move prices up at the moment is China," said a raw materials buyer at an Italian steelmaker.
U.S. recyclers were offering heavy melting scrap (HMS) 1&2 (80:20) at about $435-440 per tonne CFR Turkey, but given the scarce demand from Turkey they turned to China for some sales.
China and South Korea bought 20 deep-sea cargoes of steel scrap at $477-480 CFR in the past two weeks, but this wasn't enough to move prices up, traders said.
ASIAN CONCERNS
Steel scrap prices in South East Asia fell by about $5-10 a tonne on average since last week as demand was weak and the earthquakes and tsunami that hit Japan weighed on sentiment, according to market players.
Japan's government has downgraded its assessment of the economy for the first time in six months to reflect the disaster.
Offers to Taiwan, a major Asian importer, were at $445-450 CFR for heavy melted scrap (HMS) 1 and 2 Taiwan this week, down by about $5-10 per tonne from last week, according to traders.
"The general feeling is that the market is soft and is not getting any stronger," said a steel scrap trader.
"I don't see any factor that could change things at the moment."
However, some were more optimistic, focusing on the fact that reconstruction will start soon in Japan and more steel will be needed.
"It is a bit surprising that the market has not fallen more with all these things going on," a second trader based in the United States said, referring to the events shaking North Africa, the Middle East and Japan.
"This makes me think that despite all, the underlying fundamentals are still sound."
In the over-the-counter steel scrap swaps market, a $10 backwardation -- premium for cash over three month material -- reflected expectations of softening prices in the next few months.
"The view moving forward is still very negative. The sellers don't want to move out of their positions, and there is a lack of conviction on the bid side," said Arthur Worsley, steel derivatives broker at Freight Investors Services.
"I think everybody knows that scrap is going down. The question is: by how much?"
Posts
No comments:
Post a Comment