Posted on 28 Mar 2022
Near-term scrap and rebar futures contracts on the London Metal Exchange saw strong gains over the week to March 24, while the trading volumes dipped on the week.
March contract was up $15/mt at $639.50/mt on March 24, while the April contract gained $32.50/mt to $670/mt, according to Platts assessments from S&P Global Commodity Insights. The May contract jumped $40/mt to $660/mt, while the June contract increased $47.50/mt to $647/mt.
The contango structure over the March-April portion of the forward curve strengthened, suggesting that futures traders on March 24 continued to expect physical scrap prices to gain in the immediate near-term.
The backwardation over the April-June portion of the curve softened on the week.
Spot prices for physical imports of premium heavy melting scrap 1/2 (80:20) increased $4.50/mt week on week to $657.50/mt CFR Turkey on March 24.
Turkish mills extended their absence from the market, while market sources during the week expected the next deals to be booked at higher levels.
“The Turkish mills are quiet, they’ve not communicated much, except that their domestic [finished steel] market is slow, and the export side is running well,” a Baltic recycler said.
“I think the US sellers will come back higher. They’ll look for $670-$675/mt CFR for 80:20,” one Turkish mill source noted.
Weekly LME scrap futures trading volumes over the week to March 24 totaled 38,110 mt, down from 74,250 mt last week.
Near-term rebar futures contracts also saw strong gains over the week to March 24, in line with scrap.
March contract was up $20/mt week on week at $924.50/mt, while the April contract jumped $56/mt to $980/mt, according to Platts assessments from S&P Global. The May contract increased $15.50/mt to $945.50/mt, while the June contract rose $61/mt to $930.50/mt.
The contango over the March-April portion of the forward curve strengthened over the week, suggesting that futures traders still expect prices to see significant gains in the immediate near-term.
The contango over the April-May portion of the curve reverted to backwardation on the week, while the backwardation over the May to June portion of the curve was less firm.
Turkish physical rebar export prices increased $25/mt on the week to $970/mt FOB March 24, as market sources reported multiple fresh deals to various European countries at elevated levels during the week. However, some market sources noted that export destinations outside Europe might not accept such high prices for possible deals.
One UK trader estimated current market price for Turkish exported rebars at over $980/mt FOB, and with current rebar prices in Germany, it would be possible for European buyers to even buy rebars from Turkey at $1,000/mt FOB inclusive of the 25% safeguard duty.
“Plus, outlook for European delivered prices for rebar, going forward is further upside to over Eur1,300/mt,” he said, adding, “There are plenty of reasons for a European trader to buy Turkish rebar at $1,000/mt FOB.”
Rebar futures weekly trading volumes in the week on the London Metal Exchange totaled 12,950 mt March 24, down from 40,800 mt the previous week.
The daily outright spread between Turkish export rebar and import scrap was assessed at $312.50/mt March 24, up $20.50/mt week on week to a record high.
Elsewhere, Indian scrap futures, which settles basis the Platts CFR Nhava Sheva shredded scrap assessment, traded 180 mt by March 24, down from 330 mt traded last week. The contract has seen a total volume of 4,110 mt traded since its launch in late July 2021.
Source:Platts
