FERROUS SCRAP MARKET ROUND-UP FROM MEPS
Upward price momentum was witnessed in three of the four Indian regions
researched by MEPS. Selling figures, in rupee terms, last reached current levels
in May 2012. However, local traders remain cautious about the strength of
underlying consumption in the interim – citing reduced activity during the
country’s general election and the forthcoming monsoon season.
In China, quotations have fallen back marginally from the levels touched in
early trading. Domestic scrap traders have begun to query whether the latest
settlement figures are supported by market and economic fundamentals. The
negative sentiment has been fuelled by restrained end-user demand for finished
In April, Japanese electric furnace steelmakers increased their HMS2 purchasing
figures, prompted by tight domestic supply. In early trading, Tokyo Steel
Manufacturing, a bellwether for the domestic steel industry, lifted its
procurement prices at all five subsidiaries. The upward adjustment was executed
in three phases. Exporters based in Chubu, Kansai and Kanto expect the positive
price trend to continue in the short term.
Effective price settlements increased this month for the three bellwether cut
grades tracked in the United States. Low mill inventory and a shortage of
material created a seller’s market. As for May, brokers acknowledge that the
flow of obsolete and prime industrial grades into dealers’ yards will improve,
which could lead to lower quotations. Exporters, operating out of East and West
Coast ports, adopted aggressive pricing positions in early-April, underpinned by
the strength of the domestic market and the mistaken belief of a revival in
Turkish offshore demand. However, the positive sentiment was short-lived. The
availability of low-cost semi-finished steel material and the strength of the US
dollar had dampened both the price and tonnages for bulk cargos and
containerised scrap – particularly, shipments to Asian clients.
Taiwanese mills, operating electric furnaces, persevered with conservative scrap
purchasing policies during April, due to the recent downturn in key steelmaking
raw material prices and slow domestic reinforcing bar sales. As for May, import
tonnage is forecast to decline due to planned production cutbacks.
Arduous business conditions perist in the South Korean steel market. In May,
Korean importers are expected to persevere with a wait and see attitude. The
current initiative by US suppliers to lift prices is viewed as ill-timed,
counterproductive and will only escalate purchases from alternative sources.
MEPS - Ferrous
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