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Freight rate rise increases pressure on dockside scrap

  • : Metals
  • 19/02/21

An expected rise in freight rates for deliveries of ferrous scrap cargoes from Europe to Turkey could drive exporters to lower the dockside collection price in excess of the expected fall in Turkey's import price for April shipment.

Dockside prices in the Netherlands and Belgium are expected to fall over the coming weeks, with the Turkish import price poised to drop following completion of a major re-stocking cycle in January and early February.

Turkish mills have yet to release any bid or firm bid indication for their next purchases. But seaborne scrap market participants expect mills to try to drive down the imported scrap price by at least $10/t to around $310/t cfr Turkey.

Exporters in the Netherlands and Belgium are expected to drop their bids by a similar range in the coming weeks. But a recovery in the global Supramax and Handysize market could drive exporters to cut dockside bids even further to offset higher freight rates.

The Argus freight assessment for scrap cargoes from Amsterdam-Rotterdam-Antwerp (ARA) to Turkey was $12.50-13.50/t on 8 February — the lowest since the launch of this assessment on 6 April 2018 — because of a lack of cargo demand from various regions.

Time-charter rates for Supramaxes were heard offered at as low as $3,500/d for scrap cargoes from ARA to Turkey on 7 February. But rates have slowly rebounded on a global Supramax market recovery, with one Supramax confirmed booked at $6,500/d earlier this week to carry scrap from ARA to Turkey.

Multiple ship owners and charterers surveyed by Argus this week said time-charter rates for Supramaxes could hit around $10,000/d by mid-March, back where they were in November-December.

A $4,000/d hike in time-charter rates would result in a $2.50-4.00/t increase in freight costs for a 30,000-40,000t scrap cargo delivered from ARA to Turkey. A vessel is normally needed for 25 days to make the trip, factoring in loading, transit and unloading.

Several charterers said Handysize rates have also recovered and could rise more sharply than for Supramaxes because of Handysize demand for grain shipments from Europe to north Africa. Handysizes were heard offered this week at $7,500-8,000/d. Many exporters, particularly from the Baltic region and the UK, prefer to sell Handysize cargoes to Turkish mills because of port facility restrictions, operational limitations or strategic reasons.

Resistance from sub-suppliers

Scrap sub-suppliers, especially those that can sell to domestic mills, said they would resist lower dockside bids, as any further cut in dockside prices would leave delivered-to-dock prices below delivered-to-mill prices.

The Argus delivered-to-dock assessment for ferrous scrap HMS 1/2 was €235-245/t on 19 February, while the average assessment for German E1 ferrous scrap delivered to mill for February was €233.04-243.04/t.

A fall in the Turkish import price would put extra downward pressure on German domestic delivered-to-mill prices for March contracts, particularly when concerns over the health of the automotive industry mean steel demand and prices are showing no sign of significant improvement in the near future.

The Argus daily northwest Europe ex-works steel assessment for hot-rolled coil (HRC) was €508/t yesterday, down by €11.50/t from 2 January.

But the German domestic scrap market has limited downside compared with the Turkish import market, as the rise in German delivered-to-mill prices has significantly lagged the rise in the Turkish import price this month.


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24/11/13

Cop: Argentina pulls delegation from Baku

Cop: Argentina pulls delegation from Baku

Montevideo, 13 November (Argus) — Argentina's government today withdrew its delegation from the UN Cop 29 climate summit in Baku, Azerbaijan. The country's foreign affairs ministry confirmed to Argus that the delegation had been told to leave the event, which began on 11 November and will run through 22 November. No reason was given for the decision, but it fits the general policies of President Javier Milei, who has expressed skepticism about climate change. Milei eliminated the country's environment ministry shortly after taking office in December 2023. He is also pursuing investment to monetize oil and gas reserves, with a focus on the Vaca Muerta unconventional formation. Vaca Muerta has an estimated 308 trillion cf of natural gas and 16bn bl of oil, according to the US Energy Information Administration. In October, the government created the Argentina LNG division with a plan to involve private companies and the state-owned YPF to produce and export up to 30mn metric tonnes (t)/yr of LNG by 2030. It wants to export 1mn bl of crude. The plans are closely linked to a new investment framework, known as RIGI, that will provide incentives for large-scale investments. The administration is also pushing hard for investment in critical minerals, including copper and lithium. Argentina has the world's second-largest lithium resources, estimated at 22mn t by the US Geological Survey. It has copper potential that the RIGI would help tap. The government has not specified if pulling out of Cop 29 means Argentina will withdraw from the Paris Agreement, which Argentina ratified in 2016. The country's nationally determined contribution calls for net emissions not to exceed 359mn t of CO2 by 2030. This represents a 21pc reduction of emissions from the maximum reached in 2007. By Lucien Chauvin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

US inflation rises in October to 2.6pc


24/11/13
24/11/13

US inflation rises in October to 2.6pc

Houston, 13 November (Argus) — US inflation ticked higher in October, led by monthly gains in shelter, a reminder that the last lap in the Federal Reserve's marathon to bring inflation to its long-term target remains a challenge. The consumer price index (CPI) accelerated to an annual 2.6pc in October, in line with analysts' forecasts in a survey by Trading Economics, from 2.4pc in September, which was the lowest since February 2021, the Labor Department reported today. Core inflation, which strips out volatile food and energy prices, rose at a 3.3pc rate, unchanged on the month. The energy index contracted by 4.9pc over the 12 months, slowing from a decline of 6.8pc through September. The gasoline index fell by 12.2pc, slowing from a 15.3pc decrease the prior month. The fuel oil index fell by 20.8pc. Federal Reserve policymakers last week cut the target rate by a quarter point, following a half-point cut in September that kicked off an easing cycle from then-23-year highs. Inflation has slowed to near the Fed's 2pc target from highs above 9pc in mid-2022 that proved to be a major impetus behind president-elect Donald Trump's victory at the ballot box on 5 November. The CME's FedWatch tool today gives near-80pc odds of another quarter-point cut in December. "The economy can develop in a way that would cause us to go faster or slower" in adjusting rates lower, Fed chair Jerome Powell told reporters last week after the Fed decision. The food index rose by an annual 2.1pc, slowing from a 2.3pc gain through September. Shelter rose by an annual 4.9pc, unchanged. Transportation services rose by 8.2pc. New vehicles fell by 1.3pc while used vehicle prices fell by 3.4pc. Services less energy services, viewed as core services, rose by 4.8pc. On a monthly basis, CPI rose by 0.2pc in October, a fourth month of such gains after falling by 0.1pc in June. Core inflation rose by 0.3pc for a third month. Shelter accelerated to a 0.4pc monthly gain, accounting for over half of the monthly all-items increase, after a 0.2pc gain. Energy was unchanged in October after falling by 1.9pc in September from the prior month. Food rose by 0.2pc on the month, following a 0.4pc gain. By Bob Willis Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Five factors to watch for in the tungsten market


24/11/13
24/11/13

Five factors to watch for in the tungsten market

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CNGR’s NNI produces high-grade Ni matte in Indonesia


24/11/13
24/11/13

CNGR’s NNI produces high-grade Ni matte in Indonesia

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EU steelmakers ask for scrap export curbs


24/11/12
24/11/12

EU steelmakers ask for scrap export curbs

London, 12 November (Argus) — European steel producers association Eurofer continues to lobby the European Commission to curb scrap exports as the industry looks to decarbonise. On 12 November, Eurofer reiterated its view that the commission "recognise steel scrap as a strategic secondary raw material under the critical Raw Material Act, ensure the robust implementation and effective enforcement of the revised EU Waste Shipment Regulation to ensure compliance with the EU environmental standards in third countries and avoid circumvention, while securing a sustainable and diversified raw materials supply by leveraging bilateral Free Trade Agreements, granting reciprocal market access and eliminating illegal export bans and other distortions." EU scrap consumption is due to increase significantly in the coming years. "Scrap exports to third countries without comparable environmental and social standards [therefore] need to be restricted to ensure that the use of ferrous scrap generated in the EU contributes to sustainability objectives aligned with the EU ones," Eurofer said. The EU has long been a net exporter of ferrous scrap, with outflows of the material standing just shy of 11mn t in the first eight months of this year, customs figures show. Last year the EU exported 17.67mn t of ferrous scrap, a 5pc rise on the year. The bloc's trade has always been heavily focused on Turkey, the world's largest importer of ferrous scrap, with annual trade ranging from over half to two-thirds of total exported volumes in the past five years. Turkey, with around three-quarters of steel production based on electric arc furnace route, is heavily reliant on European-origin material. Turkey's share of EU exports increased in recent years after the UK left the EU, but the share of shipments from the bloc started rising from the second half of the mid-2010s, when Russia, another major ferrous scrap supplier to Turkey, started restricting exports. Russian exports of scrap to Turkey fell from around 2.5mn t in 2018, to 1.9mn t in 2019 and 2021 and to just over 400,000t in 2022-24. The EU's major trading partners for scrap include Egypt, India and Pakistan, all of which are third countries to the EU and non-OECD countries whose import volumes have been increasing as Asia continued to grow its steelmaking capacities, mostly through the IF (induction furnace) route. The EU's intention to restrict scrap exports has been deeply unsettling for the many developing markets' representatives, as much as its movement towards the implementation of CBAM (Carbon Border Adjustment Mechanism), which will reduce the possibility of exports to the EU from countries where steelmaking processes and carbon emissions are not compliant with the EU's stricter standards. By Corey Aunger and Katya Ourakova Annual EU-27 ferrous scrap exports metric tonnes Country 2020 2021 2022 2023 2024 Turkey 11,247,281.0 12,676,091.0 10,327,403.0 10,088,491.0 6,826,876.0 Egypt 1,076,930.0 1,810,866.0 1,431,831.0 1,570,352.0 1,237,722.0 India 443,130.0 294,994.0 1,108,881.0 1,906,608.0 576,008.0 Pakistan 853,178.0 727,466.0 700,879.0 731,182.0 371,943.0 Switzerland 455,034.0 511,098.0 463,440.0 339,894.0 355,709.0 Norway 314,627.0 294,956.0 396,933.0 451,873.0 309,299.0 Morocco 197,803.0 329,901.0 556,417.0 442,498.0 258,630.0 UK 361,741.0 307,281.0 307,173.0 275,125.0 203,786.0 US 622,523.0 574,264.0 316,077.0 694,507.0 182,064.0 Moldova (Rep. of) 251,184.0 344,609.0 79,788.0 192,964.0 179,579.0 Republic of North Macedonia 74,951.0 106,400.0 112,176.0 165,404.0 115,626.0 Bangladesh 107,611.0 149,570.0 700,108.0 388,936.0 91,410.0 Total 16,371,459 18,542,680 16,843,989 17,674,602 10,822,245 2024 data for January to August — Customs and Eurostat data Turkey's total and European scrap imports, 2010-24 Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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