The global scrap market is a tale of two cities in October, with some regions soaring while others struggle to stay afloat. While the US and Turkey are experiencing a surge in prices, China and the EU are grappling with persistent pressure on their markets. But here's where it gets interesting: what's driving this divergence, and what does it mean for the future of the industry? Let's dive in.
The global scrap market presented a mixed picture in October, with varying trends across different regions. The US and Turkey emerged as the clear winners, with prices climbing to local highs, fueled by robust import demand and export support. In contrast, China and the EU faced headwinds, as weak steel demand constrained price recovery, leaving these markets in a precarious position. And this is the part most people miss: the intricate interplay between regional dynamics, trade policies, and market sentiment that shapes the global scrap landscape.
Turkey: A Rising Star in the Scrap Market
Turkey's scrap prices have been on a remarkable upward trajectory since the beginning of October, surging by 2.7% and reaching a six-month high of $348.1/t CFR (HMS 1&2 80:20) between September 26 and October 10. This growth is expected to continue, with prices potentially hitting $350/t by the end of the week. But what's driving this surge? A combination of factors, including intensified competition for limited raw materials within Turkey, has forced mills to rely more heavily on imported supplies. Meanwhile, external markets like Egypt have increased their scrap imports, further bolstering demand.
However, here's the controversial part: can this growth be sustained in the long term, given the weak steel demand and buyers' reluctance to commit? Most market participants seem to think not, predicting price stabilization or even a slight downward correction in the short term. What do you think – is Turkey's scrap market headed for a boom or a bust?
EU: A Market in Limbo
The EU scrap market, on the other hand, has been largely stagnant, with some regions experiencing slight corrections. Germany, for instance, has seen consistently low prices over the past three weeks, while Italy's market has been volatile, with prices fluctuating between €305/t and €297.5/t. The period from September 26 to October 10 saw a modest 0.8% increase in supply, following a 2.5% decrease the previous week.
The real question is: why is the EU market struggling to gain traction? Weak demand from steelmakers, coupled with debates over potential scrap export restrictions, has created an environment of uncertainty and caution. Industry associations argue that such restrictions would jeopardize both market stability and climate goals – a bold claim that's sure to spark debate. What's your take on this issue?
USA: A Cautious Optimism
The US scrap market has shown signs of recovery, with prices increasing by 2.7% since the beginning of the month and reaching a two-month high of $303/t FOB (US East Coast). This rebound is expected to continue, with prices potentially rising to $308/t by the end of the week. But it's not all smooth sailing – high freight rates and weak demand earlier in the month had put pressure on margins.
And this is where it gets intriguing: the gradual recovery in demand from Turkey and increased activity in Egypt have provided a much-needed boost to US commodity prices. Market sentiment has shifted from defensive to more confident, with participants predicting only localized corrections in November. Do you think this optimism is warranted, or is the US market due for a reality check?
China: A Market in Transition
China's scrap market has been relatively subdued, with domestic prices declining slightly (-0.5%) to $340.46/t since the beginning of the month. Import prices, however, have remained stable at $330/mt CFR for the second consecutive week. The market had been supported by a shortage of supply earlier in the month, but the situation changed during the National Day celebrations, when steelmakers' margins shrank and electric arc furnace utilization declined.
The million-dollar question is: can China's scrap market regain its momentum, or will weak demand for rebar and rolled products continue to weigh it down? Most market participants seem to think that significant growth is unlikely, given the sluggish recovery in demand. But what if there's a hidden opportunity in this market – a counterpoint that challenges conventional wisdom? We'd love to hear your thoughts in the comments.
As we navigate the complexities of the global scrap market, one thing is clear: the interplay between regional dynamics, trade policies, and market sentiment will continue to shape the industry's trajectory. So, what's your prediction for the future of the scrap market – boom, bust, or something in between? Share your insights and join the conversation!
