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Near-term scrap futures contracts on the London Metal Exchange mostly saw losses over the week to Sept. 8, while weekly trading volumes increased.
Platts, part of S&P Global Commodity Insights data, assessed the September contract down $15/mt on the week to $365/mt, while October dropped $8.50/mt to $359/mt. The November contract gained $1.50/mt to $363.50/mt on the week, while December lost $4.50/mt to $358.50/mt.
The backwardation over the September-October portion of the curve softened on the week, suggesting some futures traders still expected scrap prices to soften in the physical market in the near term, but to a lesser extent. The overall backwardation structure over September-December also weakened.
Spot prices for physical imports of premium heavy melting scrap 1/2 (80:20) fell $31.50 /mt week on week to $368.50/mt CFR Turkey on Sept. 8, as Turkish mills booked multiple October shipment cargoes at lower levels.
“I view the Baltic-origin deal [at $363/mt CFR] as a clear indicator that as usual the market correction has a tendency to overshoot to extremes,” an EU recycler said, expecting that Turkish mills still have to cover at least 32 cargoes for October shipment.
“We expect to see the supply of scrap to show high price elasticity, as we see the downward adjustment of dockside collection prices on both sides of the pond, which leads yet again to a highly responsive downward slide on supply inflows, which we witnessed in the last recent price downturn,” the recycler added. “So, I expect the market to be bottoming out sooner rather than later.”
Weekly LME scrap futures trading volumes over the week to Sept. 8 totaled 110,600 mt, up from 44,140 mt for the week ending Sept. 1, recording the highest trading volumes since the week of Aug. 4 of 202,280 mt.
Near-term rebar futures contracts saw strong gains over the week to Sept. 8.
Platts assessed the September contract up $30.50/mt on the week to $675.50/mt, according to S&P Global data, while October jumped $22.25/mt to $675/mt. The November contract gained $10/mt to $660/mt on the week, while December increased $12/mt to $654.50/mt.
The contango over the September-October portion of the forward curve shifted to a slight backwardation, while the overall backwardation over the October-December portion of the curve strengthened suggesting that futures traders expected prices in the physical market to soften in the near term, albeit maintaining elevated levels.
Turkish physical rebar export prices increased $15/mt on the week to $675/mt FOB Sept. 8, as Turkish rebar exporters tried to maintain elevated levels amid high energy costs despite weak demand and weakening scrap prices.
Turkey’s Energy Market Regulatory Authority raised electricity prices for industrial use by 50% on Sept. 1, while gas distributor Botas raised natural gas prices for industrial use by 50.8%.
With scrap import levels into Turkey down around $30/mt, it would not be possible for Turkish mills to justify exported rebar prices around $700/mt FOB, one UK trader said. “The right rebar price today is $680/mt FOB if you bid. There is not much demand anyway. To sell real [rebar] volumes, mills have to bring their prices down to $630-$640/mt FOB.”
Rebar futures weekly trading volumes in the week on the LME totaled 29,480 mt during the week, down from 39,420 mt for week ending Sept. 1.
The daily outright spread between Turkish export rebar and import scrap was assessed at $306.50/mt Sept. 8, up $46.50/mt on the week.
Elsewhere, Indian scrap futures, which settles basis the Platts CFR Nhava Sheva shredded scrap assessment, traded 60 mt in the week to Sept. 8. The contract has seen volume of 7,080 mt traded since its launch in late July 2021.