Steel Products
Asian Scrap Markets Heating Up Even Though Steel Demand Muted
Written by John Packard
January 11, 2013
Written by: Damon Sun, Daido International
Asian markets definitively heated up on the back of the increased iron ore prices to China. Iron ore (63.5%) is trading around $160/dmt basis, which 3 months ago it was trading near $110-$120/dmt basis. The price increase is a bit unusual in terms there doesn’t seem to be an increase in demand nor a major increase in the demand on finished steel. It is based more on optimism on the new government in China and announcements of new building of railroad and highways to no where.
That said, 3 of the 4 major steel/scrap markets seem to be quite active. (South America, USA, Asia) with Europe and in particularly Turkey being subdued. Turkey was hit recently with a 5% import tax into U.A.E., and subsequently, Turkish material will concentrate on USA markets and also S.E. Asian markets.
Japan’s new government has a policy of a weakened yen. There has been 12 percent depreciation in the yen. Although Japan scrap may seem cheaper, the counter is the reality. Japanese Mills will be active in exporting finished goods and will keep local scrap at home. I believe Japan 2012 exported probably near 8 million metric tons and I believe in 2013 it will be lower at around 5-6 million metric ton levels.
Of particular note is what actions the Chinese mills will do before Lunar New Year or after Lunar New Year in early February. At moment, scrap steel will be cheaper to make finished goods than iron ore at $160/dmt levels.
Turkey will hover around $408-$410/metric ton cfr levels for HMS, Japanese Scrap has risen dramatically from Tokyo Steel announcements, USA West Coast prices have gone up approximately $65/metric ton level from the absolute lows. Traders are holding scrap sales, but will likely have to release by end January (so there will be sufficient supply by end January). Far East containerized are at $395/metric ton CFR levels whereas, FAS levels about $370-$375/metric ton FAS. Bulk cargoes to Far East are in the range of $425-$435/cfr hms basis.
I see the markets still going up until end January, prior to the Lunar Holidays. After Lunar Holidays, there may be a bit more rational decision making than the flurry that has taken place in the last 2 weeks.

John Packard
Read more from John PackardLatest in Steel Products

US and Canadian rig counts stabilize
US counts continue to hover just above historic lows, while Canadian figures remain comparatively healthy.

Plate market sources critique mill hikes amid current market conditions
Following spot market plate price increase notices issued by domestic mills this past week, participants are contemplating the rationale behind the increases and whether they will stick. Some sources anticipate that current market conditions will shift in November and believe the increases may set a new "pricing floor."

Oregon Steel Mills lifts plate prices by $60/ton
Oregon Steel Mills has joined other producers in announcing a price increase of at least $60 per short ton on steel plate.

CRU: Construction of pilot plant for green steel process starts
Voestalpine and partners have begun building an industrial-scale Hy4Smelt demonstration plant in Linz, Austria, which they hope will become key in the decarbonization of steel.

Rig count increases in the US and in Canada
Oil and gas drilling activity increased this week in the US and Canada for the third consecutive week, according to the latest Baker Hughes rig count data. US counts continue to hover just above historic lows, while Canadian figures remain comparatively healthy.