Asian & Turkey Ferrous Scrap Prices Have Firmed Due to Demand

As with most of the world, finished demand is still poor but the consensus is we have bounced off the lows on finished product pricing.

With recent iron ore gains (somewhat stable at the $50/dmt), the US Dollar strength stabilized, and the maintenance of the strong yen, scrap sourcing has reverted back to the USA as the primary sourcing.   

Scrap inventory levels are low for most major mills in Asia with total scrap inventory levels in Korea at 3 year lows as well.

Current levels of pricing to Taiwan at $165/mt CFR basis (up $5 for the week), Japan H2 at $155/mt cfr Korea basis, and SE Asia demand has picked up quite strong with various countries (Vietnam, Thailand, Malaysia, India and Indonesia) as active buyers.   This with depressed containerized and bulk freight rates translates to higher FAS values from US export terminals.  

Most mills in Asia are somewhat stuck in the quagmire of either reducing production rates in this slack demand period, or import higher priced scrap.   Seems the trend is to import the higher priced scrap.  

Changes in the markets relate to availability of Russian and Chinese billets. Both have increased in pricing on higher demand for their local regions, price increases of iron ore, and reduction of capacity from the Chinese government. These changes look to stay so going forward we should see these new levels at least hold.

Bulk shipments into Asia are still somewhat depressed as the 3 last major bulk sales are in the $179/mt cfr Korea basis. These were made prior to recent gains in the scrap markets and to the anticipation of softening prices due to demand, which has not happened yet.

We anticipate for the medium term that these new levels to hold and still anticipating a 2nd half recovery of steel demand as well.