09 Aug 2024 | 11:26 UTC

LME scrap volumes increase on week, futures contract in backwardation

Highlights

Physical Turkish scrap spot prices drop as mills pressure prices

LME scrap contract in short-term backwardation

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

After period of recent stability, spot prices for physical imports of premium heavy melting scrap 1/2 (80:20) fell on the week, and were assessed at $381 per metric ton CFR Aug. 8, down from $386/t CFR Aug. 1, as intense Turkish mill pressure on prices led to a lower sale from a European recycler on Aug. 6.

` Platts assessed LME scrap forward curve Aug 1 ($/t) Platts assessed LME scrap forward curve Aug 8 ($/t) Week on week change ($/t)
August 381.75 377.5 -4.25
September 375 369.5 -5.50
October 377.25 370 -7.25
November 377.75 374 -3.75

Weekly LME scrap futures trading volumes in the week to Aug. 8 increased to 373,480 metric tons, up from 242,150 metric tons in the week to Aug. 1.

The August-September portion of the forward curve for Turkey scrap futures on the LME entered a sharp backwardation structure, before entering a contango structure from September-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.

Rebar futures volumes traded on the LME decreased in the week to Aug. 8, with physical market activity also limited as Turkish mills held offers firm despite a lack of demand at current offer levels from European buyers.

Weekly LME rebar futures trading volumes fell to 2,060 metric tons in the week to Aug. 8, down from 18,330 metric tons in the week to Aug. 1.

Contract month Platts assessed LME rebar forward curve Aug 1 ($/t) Platts assessed LME rebar forward curve Aug 8 ($/t) Week on week change ($/t)
August 572.5 572.5 0.00
September 572.75 571.5 -1.25
October 574.75 570.5 -4.25
November 577.5 573.5 -4.00

The August-October portion of the forward curve for Turkey rebar futures on the LME entered a soft backwardation structure, indicating that futures traders expected Turkish rebar prices in the physical market to inch lower in the medium term.

Platts assessed Turkish exported rebar at $575/t FOB on Aug. 8, up $1/t on the day but unchanged on the week from Aug. 1.

Platts is part of S&P Global Commodity Insights.

Editor:

Alisdair Bowles