Asian Scrap Markets Stable, Forecast to Slow Down

The Asian scrap markets is currently stable and predicted to slow down both regarding demand as well as pricing over the next few weeks.

Mainly, summer time electricity curtailments are scheduled to take effect in early May.

Currently:

•  China Fe63.% Indian Iron ore at about $116-117/dmt.  Somewhat stable +/-$1/dmt currently
•  Asian FX rates have been strengthening against US$.
•  Japan scrap, Tokyo Steel has been increasing local buy prices for 3 weeks and export prices on FOB basis at $$320/MT FOB/$330/MT FAS.
•  Finished steel demand is still slow, with Chinese exports still a major overhang on prices.

Mainly the threat of China exports is the largest reason for slow upward movements on finished steel prices.

China exports in March were 40 percent higher than previously.

Southeast Asia prices have been very tempered despite some increased demand from India.   Despite the increase in prices in recent days, demand is still quite lackluster.

One major item of note:  Steel mills seem to be focused on short haul barge loads of scrap and containerized scrap in lieu of deep sea bulk shipments.   It shows a lack of confidence on steel demand moving forward into the summer months.

Traditionally the gap between containerized and deep sea bulk shipments have been $20/mt but that gap has been closed to around $15/MT.  Consequently, it seems there is a slight premium on containerized cargo for immediate needs versus future needs.  This psychology is being played out from US East Coast and Turkey bulk shipments as well.

Damon Sun, Daido International