The scrap forward curve on the London Metal Exchange softened across June-September contracts during the week to July 2, on market expectations of a near-term downside in spot physical scrap prices.
The forward curve shifted into a slight backwardated structure over the week to July 2, sustaining minimal losses.
July LME scrap futures contracts were down $1/mt over the week to $260/mt on July 2. August and September contracts were both down $2/mt to $259.50/mt, with the relatively flat curve signaling trader hesitation over future pricing direction.
Spot prices for physical imports of premium heavy melting scrap 1/2 (80:20) remained stable week on week at $255/mt CFR Turkey July 2.
“Perhaps $250/mt CFR for premium 80:20 material is disputable, as it depends on the US guys, and Turkish mills have shown interest at current levels with the US deal at $256/mt CFR, so I don’t expect a major drop,” an EU recycler said. Sources expect most Turkish mills to return to the market soon to buy scrap for August shipment.
Scrap futures trading volumes over the week to July 2 sat at 13,140 mt, down from 61,650 mt the previous week.
The June-September rebar forward curve shifted into a soft contango over the week to July 2, with July and August rebar futures contracts at $419/mt respectively, with July down by $2/mt and August up by $2/mt week on week.
The September contract was assessed at $420.5/mt, falling $1/mt on the week, while October contracts were lower at $417.50/mt on July 2.
Physical rebar demand remained weak in North and East African markets, while East Asia enters the rainy season, indicating a slowdown in buying for Turkish material.
S&P Global Platts assessment of Turkish exported rebar was down $4.50/mt over the week at $410/mt FOB Turkey July 2.
Rebar futures weekly trading volumes this week on the London Metal Exchange totaled 4,860 mt, down from 13,440 mt recorded in previous week.
The Turkish longs melting margin — the spread between Turkish exported rebar and import scrap – dropped $4.50/mt on the week to $155/mt July 2.
— Amanda Flint, Viral Shah