During recent 4-5 weeks scrap prices in the international market slowly moved down approximately by 8-10%. Major reason for this downturn was slump in demand caused by leave of Turkish and Asian consumers from the market, who made sufficient stocks of material by the start of September as well as long products positions weakness. Neither in Middle East nor in South-East Asia reinforced bar market does not yet meet expectations of suppliers: demand is essentially lower than expected, prices go down. So mini-mills are forced to cut their output and try their best to save on raw materials.Simultaneously, low buyers activity in the importing regions was superpositioned by decrease of consumption in the exporting regions – US, Japan, Western Europe. There was major demand for metal scrap in the end of August – beginning of September there, but during the greater half of the previous month and in the beginning of October steel companies mainly hold themselves out of the market.
As a result by the beginning of the second decade of October cost of American steel scrap HMS1&2 (80:20) in India and countries of East Asia reduced to $350-380 per ton CFR depending on destination. Japanese companies sold HMS1 to Korea as a rule for $350-360 per ton FOB. In South Europe local scrap prices dropped by 30-40 euro per ton in October as compared to the recent month and the most of traders have refocused on Turkey, offering material HMS1&2 (70:30) for $355-360 per ton CFR. However, prices for higher quality scrap (80:20) remained at $365-375/t CFR level and Russian A3 was quoted not lower than $370 per ton CFR, though there was merely no deals on these terms.
Turkish mills used favorable situation and restarted scrap purchases in the beginning of October, focusing mainly on relatively cheap European material. Owing to this they avoided price increase. However, as analysts consider, steel scrap will move up a bit in the region in the second half of October.By the start of October scrap stock at Turkish steelmakers reduced to minimum, so purchases in the next two weeks are estimated by experts at the level of 350-400 thousand tons at least. And there is merely no more cheap European scrap HMS1&2 (70:30) in the market: collections of material in EU dropped as the market fell. Simultaneously, suppliers from USA and Russia are less inclined to abatements: with current correlation between local and export prices supplies to the national consumers are more profitable for them. However, key influence to steel scrap market will make long products. Its prices in Middle East reached the bottom in the beginning of October and in November its possible to hope for some growth. Holding away from purchases during two-three month distributors and the ultimate consumers in the countries of the region have exhausted the most of their stock of steel products and as expected in the next few coming weeks they have to restart trading activity. The same increase of demand for construction steel is forecasted in the East Asia.
Weather forecasters cannot come to the one opinion on how cold the weather is going to be. However, it is quite possible to be sure a price jump in world steel scrap market in winter will be. With low scrap collections any excess of supply may have only a short term local feature. As soon as consumers start to accumulate stocks for winter, steel scrap will be immediately in shortage.