Thai domestic scrap prices touch 2020 highs, expectations firm till year-end

Singapore — Local scrap prices in Thailand rebounded to a 2020 high for the week of Nov. 12, as mills were heard clamoring for scrap alongside rising domestic billet demand from the country's re-rollers, market sources said.

Bids for domestic scrap similar to HMS I/II 80:20 were raised to Baht 9,900-10,200/kg ($324-335/mt), with its midpoint up Baht 200/kg from the week prior.

Mini-mills were heard competing to secure stable domestic flows of the raw material, as the recent return of China's billet buying spree -- since entering November -- has snapped up Thailand's usual overseas billet supplies.

This has left Thai re-rollers in the lurch, and having to now source from domestic mini-mills instead.

"China's importing activities are causing [Thai] re-rollers to have lesser buying options, while they [China] buy everything and leaving little for the rest," a Thailand-based trading source said, adding that Chinese buyers were indeed paying more competitively than local Thai re-rollers. "So overseas billet producers, who were previously selling to Thailand, mostly want to sell to China now."

The increased demand for domestic billet has then led to stronger uptake in scrap, with Thailand's domestic scrap prices rallying 10% since Oct. 21, according to S&P Global Platts data.

In contrast to local scrap prices, containerized HMS I/II 80:20 offers from Central America were heard at $292/mt CFR Thailand Nov. 12, and up $7/mt on week, according to market sources.

Seaborne scrap, while considered more competitive than domestic ones after factoring in handling costs, has not been preferred by buyers due to risk factors on long shipment times, sources said.

"Buyers aren't seeking to import scrap even if it is slightly cheaper," the trading source added. "Deliveries will only arrive in two to three months. Who knows if this spike in billet demand will still be here."

Despite uncertainty on how long billet demand will continue to support the scrap market, sources too expressed that they were not seeing much downside to prices in the near term.

"Multiple factors are supporting scrap now, especially with the stronger sentiment from China," a Thailand mill source said. "There were also some major floods in October affecting regions surrounding our capital, and this might also exacerbate issues with scrap supply and collection."

The last time the country saw prices reach similar levels was in mid September, which marked a 16-month high, Platts data showed.