LME rebar volumes increase on week, futures contracts in backwardation

Rebar futures volumes traded on the LME increased in the week to Aug. 15, as market participants reported recent billet imports giving mills more room to soften export rebar offers in physical market.

Weekly LME rebar futures trading volumes rose to 4,240 metric tons, from 2,060 metric tons in the previous week.

The August-September portion of the forward curve for Turkey rebar futures on the LME entered a sharp backwardation structure, before entering a contango structure from September-November, indicating that futures traders expect Turkish rebar prices in the physical market to correct slightly in the near-term, but recover in the medium term.

Platts assessed Turkish exported rebar at $570/mt FOB on Aug. 15, stable on the day but down by $5/mt on the week from Aug. 8, according to S&P Global Commodity Insights data.

Volumes traded for the scrap futures contracts on the London Metal Exchange, which settle basis Platts assessment, decreased on the week as physical spot prices dropped with Turkish mills pressuring the sell side.

Spot prices for physical imports of premium heavy melting scrap 1/2 (80:20) fell on the week, and were assessed at $374/mt CFR on Aug. 15, down from $381/mt CFR Aug. 8, as Turkish mill resisting further declines despite intense buyside pressure on prices.

Weekly LME scrap futures trading volumes in the week to Aug. 15 decreased to 101,130 metric tons, down from 373,480 metric tons in the week to Aug. 8.

The August-October portion of the forward curve for Turkey scrap futures on the LME entered a sharp backwardation structure, before entering a contango structure from October-November, indicating that futures traders expect Turkish scrap prices in the physical market to correct slightly in the near-term, but recover in the medium term.