Weekly scrap futures trading volumes on the London Metal Exchange rose sharply on week in the week to July 8, as the physical price volatility attracted activity in the futures market.
Scrap futures volumes over the week to July 7 totaled 189,370 mt, up from 107,450 mt for the week ending June 30, and reaching the highest volumes traded since the week ending May 28, 2020.
Near-term scrap futures contracts on the LME continued to see strong gains over the week to July 7.
Platts assessed the July contract up $24.50/mt to $405/mt, according to S&P Global Commodity Insights. The August contract gained $37/mt on week to $412/mt, while the September contract rose $34.50/mt to $404/mt.
The backwardated structure over the July-August portion of the forward curve shifted into a contango on week, suggesting that futures traders expect prices to strengthen in the near term.
The backwardation over the August-September portion of the curve strengthened on week.
Spot prices for physical imports of premium heavy melting scrap 1/2 (80:20) jumped $68.50/mt week on week to $411/mt CFR Turkey on July 7, as Turkish mills sought relatively prompt shipment cargoes to cover recent rebar and billet sales.
“We think mills might step out soon — demand is still not fully back, although they sold some [finished steel] volumes, they are only buying what [scrap] they need,” a Baltic supplier said. “There is a risk of a new drop, perhaps back down to $350-$380/mt CFR range but it all depends on the finished steel demand.”
Near-term rebar futures contracts also saw strong gains on the week to July 7.
Platts assessed the July contract up $51/mt on week to $690.50/mt, while the August contract jumped $56/mt to $690.50/mt on week to July 7. The September contract rose $60/mt to $689.50/mt.
The backwardation over the July-August portion of the forward curve flattened, suggesting that futures traders were expecting prices to be relatively firm in the immediate near term, but with a lack of clarity on near-term price direction.
The backwardation over the August-September portion of the curve softened on week.
Turkish physical rebar export prices gained $55/mt on week to $695/mt FOB on July 7, as demand from buyers largely remained soft amid further increases in mill offers for rebars in the export market.
“If scrap price[s] stay around $400-$420/mt, then rebar cannot go down below $700/mt FOB,” one Marmara mill source said. “Prices went up very fast, and Turkey will have a big holiday [Eid Al-Adha over July 8-14), so everybody is waiting — after the holidays, we will see the reality.”
Rebar futures weekly trading volumes in the week on the London Metal Exchange totaled 20,110 mt, up from 11,110 mt for week ending June 30, reaching highest trading volume since week ending June 2.
The daily outright spread between Turkish export rebar and import scrap was assessed at $284/mt July 7, down $13.50/mt on week.
Elsewhere, Indian scrap futures, which settles basis the Platts CFR Nhava Sheva shredded scrap assessment, traded 90 mt on week to July 7. The contract has seen a total volume of 6,240 mt traded since its launch in late July 2021.
— Rabia Arif, Viral Shah
