Ferrous scrap plays catch up after steel’s dramatic tumble

Ferrous scrap prices have crashed over the past five weeks, finally coming more in line with weakened steel prices, which have fallen by a larger magnitude since the middle of 2018. Using CFR Turkey scrap as a gauge, spot prices of HMS I/II 80:20 have fallen $136.5/mt from their peak in March 2018 as of September 12. Over the same period, rebar prices on an FOB Turkey basis have fallen by a larger $172.5/mt, S&P Global Platts data show. While in percentage terms, prices of scrap have fallen 36%, compared with 29% for rebar, market participants typically view scrap and steel prices in absolute rather than relative terms, as the yield ratio of steel per ton of scrap is nearly one-to-one. But in comparison with steel billet prices on an FOB Black Sea basis, which saw prices fall $186/mt (or 34%) since the March 2018 high, the fall in scrap prices still lags by a wide $50/mt, according to Platts data. This would translate to tighter margins for the Turkish steel industry, floating at an average of $166/mt thus far this year through to September 12, a far cry from the 2018 average of $195/mt – and this despite the… continue reading

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Source: CTRM Center

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