LME scrap forward curve remains in near-term contango

Scrap futures contracts on the London Metal Exchange remained at largely stable levels over the week to March 18, as physical spot prices continued to fall on the week.

S&P Global Platts assessed the March scrap contract down $1/mt on the week to $439.50/mt on March 18, while the April contract increased $3/mt to $452/mt. The May contract also rose, up $2/mt to $458/mt, with June up $4.50/mt to $457.50/mt.

The forward curve remained in a contango structure for March-May contracts over the week. This suggests that futures traders still expect near-term strength in the physical market, despite losses in the physical spot market over the week.

Spot prices for physical imports of premium heavy melting scrap 1/2 (80:20) dropped $15/mt on the week to $425/mt CFR Turkey March 18, as mills largely held back from buying, attempting to pick off lower-priced cargoes amid news of multiple offers in the market.

“From what I see, no buyer is rushing at all,” an EU trading source said, citing an indicative tradable value for premium HMS 1/2 (80:20) at $425/mt CFR, with down to $420/mt CFR also considered possible.

Weekly scrap futures trading volumes over the week to March 18 totaled 55,740 mt, sharply down from 125,850 mt recorded last week.

Rebar futures saw minor losses on the week for March-April contracts, with the forward curve moving from a slight near-term backwardation into a soft contango over March to May contracts.

Platts assessed the March contract down $3/mt on the week to $629.50/mt March 18, while the April rebar contract decreased 50 cents/mt to $630/mt. The May contract rose $3/mt to $633.50/mt, while June was stable at $631/mt.

The Turkish physical rebar export prices also fell amid soft demand, although some Turkish mills tried to maintain elevated offer levels. Platts assessment of Turkish exported rebar fell $18/mt over the week to $619.50/mt FOB Turkey March 18.

Rebar futures weekly trading volumes this week on the London Metal Exchange totaled 19,400 mt, slightly down from the 22,020 mt last week.

The outright spread between Turkish exported rebar and import scrap was down $3/mt on the week to $194.50/mt March 18.

— Viral Shah