Scrap prices at the global market have decreased, but will remain high
21.01.2021
Despite expectations of continued growth in scrap prices on international markets, prices for metallurgical raw materials went down. The price of HMS 1& (80:20) scrap in Turkish ports decreased by 8.3% over the period January 12-20, from $480 to $440 per ton.This is most likely not a long-term change in the price trend, but a temporary correction due to an increase in supply and a certain level of saturation of warehouse stocks among consumers. Scrap prices in Turkey fell as local steel mills faced weak demand and pressure on finished metal prices. As a result, they reduced their purchases of scrap metal. In addition, as supply increases, buyers are trying to lower prices.
All other factors mean that scrap prices are still high. In particular, we are talking about the opportunities for the export of scrap to China, which appeared after the change in the local standards for scrap metal.
These changes may lead to a redirection of scrap supply flows to China, which, along with the imposition of restrictions on the export of this type of raw material by a number of countries (Russia, Argentina), should support scrap prices in 2021.
Earlier, according to the forecast of the Ukrpromvneshekspertiza, it was expected that in January export quotations of scrap metal would continue to rise against the backdrop of an increasing seasonal deficit and growing demand from buyers from Turkey and South Korea. The forecasted level of scrap prices in January was in the range of $460-500/mt CIF.
Experts predicted a decline in scrap prices in February to $470-490/mt CIF. Analysts of Ukrpromvneshexpertiza identified the following factors influencing the February price reduction:
- slight increase in supply;
- increase in stocks of raw materials in warehouses of consumers;
- stability of prices for long products in the Middle East region and in Turkey.
