Asian Scrap Markets: Price Slide Until End of August

The Asian steel mills have been trying to maintain the finished product prices despite the weakening of the ferrous markets. From the Asian mills perspective, they also do not want a severe drop in scrap prices. The factors influencing the scrap markets :

A.)    In Taiwan, besides summer electricity curtailments, 2 mills in Kaoshiung have one week maintenance schedules and one mill in Kaoshiung is out of commission for 2-3 months due to an explosion in the furnace from a closed cylinder. In Taichung, there is one mill down in August for maintenance schedules.

1. Consequently, there is more available domestic scrap sourcing and a weakening demand for imported scrap.
2. Prices have come off approximately $10-$12/mt from the highs two weeks ago.

B.)    Korea is also on summer electricity curtailments and mainly sourcing Russian and Japanese scrap.

C.)    Japanese H2 scrap prices are off approximately 500-1000 yen of recent highs. Tokyo Steel dropped their buying prices at all plants 500 Yen on Tuesday this week.

D.)    Ramadan Holiday so Turkey and Indonesia are quiet.

The overhang on prices is still focused on the low price iron ore (abt $92-$93/dmt).  Rumors of low quotes, and low buys on finish products ex China continue to spread. But actual inventory or confirmed sales at these low prices are not transparent.   More likely used as negotiating tools against local steel mills.

For the next few weeks until the end of August, I believe prices will continue to slowly slide as there is no foreseen stimulus to strengthen demand.