28 Jun 2024 | 14:22 UTC

LME scrap contract volumes double on week; rebar and scrap contracts in contango

Highlights

Volumes traded on LME scrap contract double on week

LME rebar volumes increase on week

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Volumes traded for the scrap futures contract on the London Metal Exchange, which settle basis Platts assessments, grew sharply on the week following a flurry of bookings in the physical markets amid an intense round of restocking from the Turkish mills.

Spot prices for physical imports of premium heavy melting scrap 1/2 (80:20) recovered during the week and was assessed at $390.25/mt CFR June 27, up $4.25/mt on the week from $386/mt June 20. The Turkish mills returned from the Eid al-Adha holiday period observed in the week to June 22 and underwent an intense round of restocking in the week so far, while sellers simultaneously reported a lack of scrap availability.

The June-September portion of the forward curve for Turkey scrap futures on the London Metal Exchange remained in a soft contango structure, indicating that futures traders expect Turkish scrap prices in the physical market to continue to follow an upward trend in the near term.

Contract month Platts assessed LME scrap forward curve June 20 ($/mt) Platts assessed LME scrap forward curve June 27 ($/mt) Week-on-week change ($/mt)
June 383.5 384.5 1.00
July 384.5 388 3.50
August 383 385.5 2.50
September 384.5 386.5 2.00

Weekly LME scrap futures trading volumes in the week to June 27 doubled to 348,500 mt, increasing from 179,300 mt recorded in the week to June 20.

Near-term rebar futures contracts on the London Metal Exchange also saw gains as the market returned from the Eid al-Adha holiday period, despite continued weak demand in the physical market for exports of Turkish finished steel.

Contract month Platts assessed LME rebar forward curve June 20 ($/mt) Platts assessed LME rebar forward curve June 27 ($/mt) Week-on-week change ($/mt)
June 577 575.5 -1.50
July 576.5 581.5 5.00
August 580 582.5 2.50
September 585.5 587.5 2.00

The June-September portion of the forward curve for Turkey rebar futures on the London Metal Exchange remained in a contango structure, indicating that futures traders expect Turkish rebar prices in the physical market could follow an upward trend in the near term.

Turkish rebar export prices inched up on June 27, as the Turkish mills kept offers firm in response to recent increases in scrap prices. Platts, part of S&P Global Commodity Insights, assessed Turkish exported rebar at $577.50/mt FOB on June 27, up $2.50/mt from June 26, but unchanged from June 20.

Platts assessed the daily outright spread between Turkish export rebar and import scrap prices at $187.25/mt June 27, well below the $200/mt scrap-rebar conversion spread commonly cited by the mills as the breakeven level.

Weekly LME rebar futures trading volumes in the week to June 27 totaled 17,600 mt, up from 13,380 mt recorded in the week to June 20.

Editor:

Ribhu Ranjan