LME scrap futures trading volumes see pick up in H2 2020

London — Scrap futures trading volumes on the London Metal Exchange rose in the second half of 2020 to-date, compared to H1 2020.

LME scrap trading volumes totaled 1.45 million mt from July to Dec. 30, up from 1.35 million mt in H1 2020. Monthly scrap volumes averaged 242,050 mt over H2 2020, compared to a monthly average of 224,325 mt over H1 2020.

Volumes in early 2020 dipped following the impact of the coronavirus first wave, with April 2020 volumes totaling only 121,250 mt, before recovering to a near two-year monthly volume high of 557,250 mt in May 2020.

Spot prices for physical imports of premium heavy melting scrap 1/2 (80:20) into Turkey had fallen sharply to a four-year low of $207/mt CFR on March 31, on demand concerns, before recovering sharply.

The Platts Turkish premium HMS 1/2 (80:20) index has since risen to a nine-year high of $477.50/mt CFR Turkey on Dec. 31, amid Turkish mill scrap demand boosted by strong orderbooks into Q1 2021, on positive end-user demand sentiment for 2021 and news of high efficacy in various coronavirus vaccine candidates.

The Platts CFR Turkey scrap index has risen almost $200/mt from a recent dip of $282.25/mt CFR on Oct. 8.

This meant that the scrap forward curve saw a persistent near-term contango between the current month and first month ahead over the final three months of 2020, providing ample opportunity for physical market participants to sell forward versus spot prices and lock in gains.

LME scrap futures trading volumes for 2020 totaled 2,798,250 mt, down 11.1% from 2019's total of 3,148,720 mt.

Trading volumes of rebar futures on the LME in 2020 totaled 614,310 mt as of Dec. 30, to make the highest annual trading volume on the contract since its launch in late 2015. The 2020 rebar futures volumes were up 7.8% from 569,870 mt in 2019.