FUTURES WRAP: Near-term LME scrap backwardation firm, weekly trading volumes rise

Trading volumes for scrap futures contracts on the London Metal Exchange gained in the week to April 13, while the volumes dropped for rebar futures contracts.

S&P Global Commodity Insights' Platts assessed the April contract down $18/mt on week to $619.50/mt on April 13. The May contract fell $20/mt to $610/mt, while the June contract dipped $20.50/mt to $599/mt. The July contract was down $19/mt to $589.50/mt.

The backwardated structure over the April-May portion of the forward curve strengthened slightly on the week, suggesting that futures traders on April 13 continued to expect physical scrap prices to soften in the near-term.

The backwardated structure over the May-July portion of the forward curve remained largely stable, albeit at lower levels.

Spot prices for physical imports of premium heavy melting scrap 1/2 (80:20) fell $11.50/mt week on week to $642.50/mt CFR Turkey on April 13, as most mills continued to hold back from buying further May shipment cargoes.

"The mills are trying to make suppliers nervous with talk of Russian-origin billet but we're only seeing limited quantities of billet available - buyers, however, are postponing their purchases due to the negativity and uncertainty in the market," a Baltic recycler source said.

Weekly LME scrap futures trading volumes over the week to April 13 totaled 51,080 mt, up from 12,330 mt last week.

Near-term rebar futures contracts also saw sharp losses over the week to April 13.

S&P Global's Platts assessed the April contract down $10/mt on the week to $939.50/mt. The May contract fell $30/mt to $904.50/mt, while the June contract lost $31/mt to $894.50/mt. The July contract fell $46/mt to $884.50/mt.

The backwardation over the April-May portion of the forward curve strengthened sharply over the week, suggesting that futures traders still expect prices to soften in the near term.

The backwardated structure over the May-July portion of the forward curve also strengthened sharply.

Turkish physical rebar export prices decreased on the week to $945/mt FOB on April 13, as sources reported weak demand in the market amid a lack of noticeable deals to Europe. However, prices for EU destinations remained sharply higher at $965-$975/mt FOB.

The Muslim holy month of Ramadan also put pressure on export demand from regular, non-European markets.

"The market is bad, nothing is happening," a Turkey-based trading source said, adding that the prices were likely to fall in the near term. "Mills are not buying scrap either, so scrap will have to correct downward too," he added.

Rebar futures weekly trading volumes in the week on the London Metal Exchange totaled 750 mt on April 13, down from 8,300 mt the previous week.

The daily outright spread between Turkish export rebar and import scrap was assessed at $302.50/mt April 13, up 50 cents/mt week on week.