Global scrap market balances between different trends in October

Global prices are moving unevenly: the US and Turkey are experiencing growth, while the markets in China and the EU remain under pressure.

In October, the global scrap market developed unevenly. Turkish and American prices rose, reaching local highs, thanks to import demand and export support. In contrast, in China and the EU, the market remained under pressure from weak steel demand, which limited the scope for price recovery.

Turkey

Scrap prices in Turkey have risen by 2.7% since the beginning of October (September 26–October 10), reaching their highest level since early April this year at $348.1/t CFR (HMS 1&2 80:20). At the same time, the growth continues, and by the end of this week, an increase to $350/t is expected.

At the end of September, the market was in a state of uncertainty, with mills postponing large purchases due to weak steel sales, and suppliers from Europe and the US trying to maintain higher price benchmarks, citing more expensive freight and higher purchase rates in their domestic markets. At the same time, competition for limited raw material supplies within Turkey intensified, prompting mills to turn to imported supplies more often.

In early October, a gradual recovery in demand and the need to meet November requirements led Turkish mills to accept more expensive offers. Prices were also supported by rising dock rates in Europe, the tough stance of exporters, and the influence of external markets, particularly Egypt, which increased its scrap imports after imposing duties on Russian billets.

As a result, quotations reached a new six-month high. At the same time, most market participants agree that further significant growth is unlikely, as demand for steel remains weak and buyers are waiting. In the short term, prices are likely to stabilize near their current levels, with the risk of a slight downward correction if mills suspend purchases after the most urgent needs are met.

EU

The EU market remained stable during the period, with a slight correction in some regions. In Germany, for example, scrap prices have remained consistently low over the past three weeks at €280/t ex-works (E3). In Italy, the market fluctuated in early October, with prices initially rising to €305/t, but later dropping to €297.5/t delivered basis (E3). Thus, for the period of September 26 – October 10, there was a 0.8% increase in supply, while the previous week there was a 2.5% decrease.

In Germany, the market was under pressure from weak demand from steelmakers, who were reducing activity due to problems with sales of finished products. This led to traders’ caution and limited trading, as well as a lack of incentives for price recovery. An additional factor was the debate over possible restrictions on scrap exports, which industry associations oppose, emphasizing the risks to the market and climate goals.

In Italy, quotations fell sharply in September as demand for steel remained sluggish and mills bought only minimal volumes. In early October, the market tried to recoup losses, but the lack of stable demand quickly led to a new downward correction. Western Europe saw a similar decline amid sufficient scrap supply and limited purchases.

Market expectations for the coming period point to the maintenance of current quotations. Some support may come from a recovery in demand in Turkey, but overall, prices in the EU are likely to fluctuate in a narrow range with no signs of sustained growth.

USA

In the US market, scrap prices have increased by 2.7% since the beginning of the month and reached a maximum since mid-August at $303/t FOB (US East Coast). At the same time, the price is expected to rise to $308/t by the end of this week.

In late September, the market was under pressure from weak demand. Expected shutdowns of mini-mills and low activity in the flat products segment increased pessimism. Market participants predicted a decline in quotations in October, but export activity partially restrained the fall.

In early October, US mills put forward lower price targets, but resistance from traders and more expensive exports prevented deep declines. At the same time, freight rates remained high, which increased pressure on margins. A gradual recovery in demand from Turkey and increased activity in Egypt provided additional support for US commodity prices. Thus, by mid-October, the market showed some recovery.

Market participants note a change in sentiment from defensive to more confident, predicting only localized corrections in November. In the short term, prices are likely to remain in a narrow range with moderate support for exports.

China

Since the beginning of the month, scrap prices in China have declined slightly in the domestic market (-0.5%) to $340.46/t, and further downward correction is expected. At the same time, import prices have been stable for the second week in a row at $330/mt CFR.

At the end of September, the market was supported by a shortage of supply. Reduced supplies supported domestic prices despite weak demand for steel. The situation changed during the National Day celebrations, when steelmakers’ margins shrank and electric arc furnace utilization declined. As a result, scrap consumption in the EAF decreased, which put pressure on scrap prices.

Market participants were cautiously optimistic after the holidays due to local increases in purchase rates by some mills, but most agree that there is no significant room for growth due to the weak recovery in demand for rebar and rolled products. The import segment remained passive. Japanese suppliers kept their offers at $330/tonne, but Chinese mills expect lower levels, close to $300/tonne, which has virtually stopped trading.

Domestic prices are expected to remain under pressure, with a gradual downward trend. The import segment is likely to remain stable, but low buyer activity will limit its role in the market balance.

Courtesy : https://gmk.center/