Metals & Mining Theme, Ferrous, Non-Ferrous

October 04, 2024

LME scrap volumes remain strong, futures contract sharpens contango

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HIGHLIGHTS

Physical scrap prices increase sharply amid bullish sentiment

LME scrap and rebar contracts in contango

Traded volumes for Turkish scrap futures on the London Metal Exchange retreated on the week but remained well above average as Turkish mills enjoyed strong rebar sales and physical scrap prices rallied.

A total of 314,830 mt of LME scrap futures, which settle basis Platts assessments, were recorded during the week to Oct. 3, down nearly a third from the previous week.

The week to Sept. 26 had seen the second highest volume of the year so far at 460,180 mt, behind only the 598,430 mt traded in the week to Jan. 11.

Weekly volumes in the year to date have averaged 236,570 mt.

Contract month Platts assessed LME scrap forward curve Sept. 26 ($/mt) Platts assessed LME scrap forward curve Oct. 3 ($/mt) Week on week change ($/mt)
September 369.25
October 379.25 388.5 9.25
November 378.75 397 18.25
December 378.5 395.5 17.00
January 396.5

The October-November portion of the forward curve for Turkey scrap futures on the LME significantly sharpened its contango structure during the week, before flattening out for December and January, indicating that futures traders expect Turkish scrap prices in the physical market to increase sharply in the near-term.

Rebar futures volumes traded on the London Metal Exchange decreased slightly in the week to Oct. 3, with the Turkish mills preferring to focus on supporting their recently strong domestic rebar market with sales booked at more attractive prices, causing export deal activity to slow down as mill offers outpaced buyer interest.

Weekly LME rebar futures trading volumes fell to 13,510 mt in the week to Oct. 3, down from 28, 430 mt recorded in the week to Sept. 26.

Contract month Platts assessed LME rebar forward curve Sept. 26 ($/mt) Platts assessed LME rebar forward curve Oct. 3 ($/mt) Week on week change ($/mt)
September 578.75
October 585.5 599.5 14.00
November 586.5 603 16.50
December 589.5 603 13.50
January 603

The October-November portion of the forward curve for Turkey rebar futures on the London Metal Exchange was also in a contango structure, indicating that futures traders expected Turkish rebar prices in the physical market to inch higher in the near-term.

Platts assessed Turkish exported rebar at $600/mt FOB on Oct. 3, up $5/mt on the day and $15/mt on the week from Sept. 26.

Platts is part of S&P Global Commodity Insights.

Editor:

Alisdair Bowles