LME scrap, rebar future contracts weekly trading volumes increase

Most near-term scrap futures contracts on the London Metal Exchange saw slight losses week on week to July 13, while trading volumes increased.

Weekly LME scrap futures trading volumes over the week to July 13 totaled 132,030 mt, up from 43,250 mt recorded during the week ending July 6.

Platts, part of S&P Global Commodity Insights, assessed the LME July contract up $3.50/mt week on week to $373/mt on July 13, while August dropped $2/mt to $369/mt, September fell $1/mt to $371.50/mt and October softened $2/mt to $372/mt.

The soft contango over the July-August portion of the forward curve for Turkey scrap futures on the LME shifted to a soft backwardation, highlighting future traders’ expectations that prices for scrap in the physical market might weaken in the near term.

The soft contango over the August-October portion of the forward curve remained stable.

Spot prices for physical imports of premium heavy melting scrap 1/2 (80:20) decreased $5/mt week on week to $370/mt CFR Turkey on July 13, as Turkish mills targeted lower levels due to recent declines in domestic rebar and billet prices, while sellers resisted a significant fall in prices.

“With the current exchange rates, the European recyclers will be out of the game. The Turkish mills need no more than 20-25 deepsea cargoes for August shipment, so the buyers will be in no rush to import from US and Baltic suppliers,” a Turkish mill source said. Some market sources reported that Turkish mills were currently more inclined to purchase cheaper billets compared to imported scrap.

Most near-term rebar futures contracts on the LME also saw losses over the week to July 13, as buyers continued to view Turkish rebar prices in the export market as too high to work, despite lowered offers for Turkish rebar in the export market week on week. In addition, with cheaper options available from rebar exporters in other regions and weak demand in the domestic rebar market, rebar prices remained under pressure for both domestic and export markets for Turkish mills.

Platts assessed the July contract down week on week by $7/mt to $583.50/mt on July 13, while the August contract lost $9.75/mt to $579.50/mt, September was flat at $585.50/mt and October dropped $4/mt to $581.50/mt.

The backwardation over the July-August portion of the forward curve for Turkey rebar futures on the London Metal Exchange strengthened, highlighting that futures traders continued to expect softening of near-term rebar prices in the physical market.

The soft backwardation over the August-September portion of the curve shifted into a soft contango, while the flattened structure over September-October shifted into backwardation.

Turkish physical rebar export prices dropped $19/mt week on week to $580/mt FOB on July 13. The daily outright spread between Turkish export rebar and import scrap was assessed at $210/mt, down $14/mt.

Rebar futures weekly trading volumes in the week to July 13 on the LME totaled 4,900 mt, up from 1,430 mt recorded over the week to July 6.

Elsewhere, LME Indian scrap futures, which settle basis the Platts CFR Nhava Sheva shredded scrap assessment, traded 120 mt week on week to July 13. The contract has seen a total volume of 14,310 mt traded since its launch in July 2021.

Author Rabia Arif