Taiwan containerised scrap price fall to 14-month low

Taiwanese containerised ferrous scrap import prices moved to a 14-month low as seasonal lulls and weak demand in the downstream markets weighed on market sentiment and procurement appetite.

The Argus daily containerised HMS 1/2 80:20 cfr Taiwan price fell further to $403/t today, the lowest since 6 April 2021. The index dropped by $25/t on 17 June.

As scrap demand in Turkey eroded in the past two months, global scrap suppliers sought to float ferrous bulk scraps into Asia, which may potentially lead to a supply glut. Evidencing this, a deep-sea bulk deal from the Baltics was heard concluded at $420/t for HMS 1/2 80:20 last week.

Following the trade, one major Taiwanese steelmaker confirmed it has tasked its procurement team to look into the more competitively priced bulk scrap from other regions.

"Typically, Taiwanese mills do not make 30,000t procurement in one go," a trader said. "It is a dangerous position to take, and we only do it when we foresee firmer steel demand in the near term." It added that mills are likely to look to capitalise on the supply overhang and wait for prices to drop further. Or some of them may seek short-sea cargoes for Japanese H1/H2, which are typically between 3,000-5,000t.

Another large steelmaker said that bulk scrap suppliers from Europe, the US and Australia have became more active and more open to offering bulk scrap to Asia.

In addition, tepid demand has also weighed on sentiment in the containerised market. Taiwanese mills typically cut outputs during the summer months to conserve energy consumption and avoid the higher tariffs. Several mills confirmed they will cut shifts down by four to eight hours each day, while some have brought forward their maintenance plans. Outputs are expected to fall by 10-30pc, compared with May, during the summer months, according to an Argus survey.

The rampant Covid-19 spread in Taiwan posed as a major headwind for the ferrous steel scrap sector, market participants said. "Covid has a detrimental impact on the country's broader economic data, and this will affect the construction and manufacturing sector, which will affect the already-fragile steel and scrap demand," a trader said.

By Jing Zhi Ng