Activity on Asian ferrous scrap markets are expected to decline as a result of the escalating conflict between the US and Iran, causing growing concerns among steelmakers on finished steel sales. But some Japanese traders anticipate trade flows to increase within Asia.
Spot trading activity was thin this week, because both buyers and sellers stepped back to assess the impact of the conflict in the Mideast Gulf on commodity markets. Asian ferrous markets are not directly exposed to potential logistics disruptions, but many scrap participants chose to stay on the sidelines given tighter vessel availability, rising freight costs, increasing production costs, volatile exchange rates and unclear direction in the steel market.
Scrap sellers were cautious to update offers without first securing vessels. Freight rates received by a Japanese trader this week were only slightly higher by $3-4/t from last week because the routes are within Asia, the trader said. But offers are quite limited, and shipowners will raise rates further if fuel costs continue to climb, they added.
In addition to higher freight rates, Japan's firm domestic market further challenged export negotiations. Tokyo Steel increased domestic collection prices by $12.70-15.80/t over 19 February-3 March in an effort to retain more scrap in the local market.
Some Japanese traders expect demand from south Asian countries for Japanese scrap to increase if disruptions around the strait of Hormuz reduce supply flows from the Middle East. Pakistan imported 1.23mn t of scrap from the UAE in 2025, while India imported 510,000t from the UAE in the same year, according to Global Trade Tracker (GTT) data. South Asian buyers need to source alternative supply to meet their production demand, a Japanese trader said.
Meanwhile prices in some Asian markets like Taiwan, where mills typically prefer to make weekly procurements, have started to rise this week. Offers for containerised HMS 1/2 80:20 have risen as high as $330/t this week, up by approximately $10/t from the last traded price in the week of 23-27 February. Argus assessed the HMS 1/2 80:20 containerised scrap price at $225/t on 4 March, marking a $5/t increase on the day.
Weaker steel demand to pressure scrap
Potential weakness in steel sales is also weighing on Asian steelmakers' scrap procurement. The Middle East was an important market for Chinese steel products in 2025. Higher freight rates will affect shipments of previous orders and new sales of finished and semi-finished steel products from Asia to the Middle East. Some producers may redirect supply to Asian markets, intensifying regional competition.
Asian scrap buyers are also concerned that steel prices may not rise in line with raw material costs because elevated steel prices could dampen downstream demand. March-May is typically the peak construction season across many southeast Asian markets.
If the US-Iran conflict persists longer than expected, higher crude oil prices could fuel inflation expectations and heighten growth risks in many economies, market sources said.
