Argus Metal Movers: Tracking ferrous scrap demand drivers ahead of Q1

Elif: Welcome to "Argus Metal Movers," the podcast where we explore the trends shaping global ferrous markets. I am Elif Eyuboglu, senior reporter at Argus Media, and today we are focusing on three key ferrous scrap markets, South Asia, Turkey, and North Africa. We will begin with South Asia as the demand dynamics that are shifting. Imported scrap demand has been subdued by the bigger story as how steelmakers, especially in India, are looking at alternatives like direct reduced iron, DRI, to manage costs. That's a trend that could ripple across the region and reshape trade flows heading into the new year. And after that, we will move to Turkish scrap markets and we will talk about first quarter purchasing strategies from scrap importers in Turkey, and we will head to North Africa where scrap remains as the dominant feedstock, but meals are showing more and more appetite on DRI. And finally, we will touch briefly on CBAM, the European Carbon Border Adjustment Mechanism, and what it could mean for scrap flows in the longer term.

Joining me today to unpack all of this is Corey Aunger, our associate editor on Argus ferrous scrap market. Hi, Corey, it's great to have you here today. My first question for you is how the growing use of DRI by Indian steel makers reshaping scrap demand in South Asia and what does this mean for importers heading into the new year?

Corey: Hi, Elif. Thank you for having me. Yeah. Indian steel makers, as you said, have definitely stepped up the use of DRI in their mixes. And there has been some increased imports this year from a fair few regional markets. And on the back of that, imports of scrap have declined, especially compared to a couple years ago when India imported around 10 million tons in 2023. And this made it one of the largest importers globally. Still a fair bit behind Turkey, but it made them one of the largest, if not second in the world. But in 2024, that fell slightly to 8 million tons. And this year, according to customs data, looks roughly around 6 million tons in the January to September period. Scrap procurement has been a bit of a challenge for secondary steel makers in India at times through 2025, with the fragmented nature of that domestic scrap market tax issues and prices in the seaborne market making DRI at times more attractive.

The country is also trying to become more self-sufficient in its scrap supply, reducing dependency on the import market through various policies. But industry leaders have said that this is still several years, maybe a decade away. So, their activity in the import markets will likely remain. The question is, to what extent is the main one? For scrap, there are still requirements for early next year that still need filling, which is supportive to the import market, but more recently, another headwind has come in from currency exchanges. In late November, the Indian rupee depreciated to record lows against the U.S. dollar, which the seaborne market is priced in, making imports far more expensive, further impacting trade, which has been much more depressed or has been coming to some headwinds throughout 2025 compared to previous years.

And as a result, throughout this year, exporters have looked more to neighbouring markets across South Asia, in particular Pakistan. Customs data shows that Pakistan has already exceeded 2024 total scrap imports in the January to October period. This is a market that exporters from the UK in particular have focused more on...predominantly due to slightly better demand and also more attractive pricing. Bangladesh has shown low demand in recent months due to persistent weaker steel markets. And Bangladesh is a bigger player in the bulk market compared to the rest of South Asia, which India and Pakistan are more container-focused. And this reduced activity in the Bangladesh bulk market has led to some interesting developments recently with U.S. West Coast exporters shipping some cargos to Turkey, which is pretty rare really amid more competitive prices and an arbitrage window.

Elif: Well, that's very interesting considering scrap prices in Turkey have surged from mid-September lows and the increase is still continuing further into early December. And yesterday, on December 3rd, the deep sea HMS 80-20 prices climbed to $368 per tonne. What are the main drivers behind this sharp upward trend and what are the market expectations for the first quarter next year?

Corey: Yeah. Bulk scrap prices in Turkey have seen some support from a multitude of factors, which, as you say, have driven prices from the September low to recent highs. Particularly, the level is now roughly at, I think, the highest since... I'm going to start there. I'm going to start there again. Bulk scrap prices in Turkey have seen support from a multitude of factors, which have driven prices to the highest level since April. And this is fundamental to a lot of seaborne markets because Turkey as the largest importer globally is a major pricing . I mean, these factors that have contributed to the rise, there's a fair few of them really. Freight rates increased throughout the last few months and have remained pretty firm, which has supported seaborne scrap pricing. We've seen some slight movements in some basins recently, but generally speaking, the bulk freight rates are still pretty elevated and that is supportive. Supply has also contributed.

As we head into the winter months, supply becomes a far more of a prominent factor too. I mean, this isn't out of the ordinary as a seasonal trend owing to lower generation and collection rates. And some regional supply regions have somewhat more structural supply issues in slowdowns and demolition rates, for example. One way that this is highlighted is particularly in the dockside markets, which is where the exporters purchase additional material from suppliers and from inland yards to be delivered to their export yards. Prices across a few key export regions to Turkey have seen some increases throughout the second half of November into December. And this has come as exporters have tried to stimulate an increase in third-party flows. And market participants have said that they pointed towards tightness and scrap availability as one of the leading factors to these increases.

If we take the UK, for example, prices have risen a fair bit these past few weeks, tail end in November, and activity in various ports across the country have been pretty high with a number of large vessels coming and going for loading scrap to markets like Turkey and those in North Africa. At the same time, the final factor really, if we were to simplify just down to three, Turkish steelmakers have shown good, healthy demand for scrap imports. As of early December, around an estimated 20 cargos have already been booked for January loading, which is pretty unusual for such a number at such a time. And this follows a good demand for end-of-year shipments, too, in November and December. So, they're showing good appetite for January with elevated prices on demand. And freight is also a factor. And supply availability has also contributed to that rise too.

Elif: That's a very valuable insight. So, you're saying that Turkey is well booked in terms of scrap orders for the first quarter next year. And moving on to North Africa, Egyptian safeguard duties and Moroccan infrastructure push have lifted regional scrap imports, while Algeria remains focused on its domestic DRI output. How significant is North Africa's growing appetite for scrap and what does it mean for global trade flows, particularly for the UK scrap exports?

Corey: Yes. North Africa has seen some increased demand and activity recently. We've seen recent measures from Egypt in terms of trade policy and growing investment and infrastructure projects in Morocco, ahead of the country co-hosting the 2030 FIFA World Cup, bolstering appetite for imported scrap. Morocco in particular has seen some decent growth, but it's worth mentioning, structurally, these numbers are low compared to bigger, more established bulk import markets like Turkey and even Egypt to an extent. Morocco imports have already hit 1 million tonnes this year and looking like it will exceed 2024's total, which is more than double the annual inflows at the start of the decade. Egypt, by comparison, is a much larger market in terms of scrap imports, importing around 3.5 to 4 million tonnes a year, with annual flows largely range-bound around those numbers the past five years.

Earlier this year, imports to Egypt were low. We've seen some uptick in recent months, particularly with government policy, like the safeguard duties central to that shift. These measures have arguably curbed a lot of inflows of finished products and with production largely via more of scrap-intensive electric arc furnace routes. There has been a reaction in the import market and we've seen an uptick compared to earlier in the year. And on the Morocco side, UK exports to Morocco have risen in recent years, but it hasn't necessarily cut into market share for other markets, as the UK is a major net exporter with a good 70%-80% of the scrap it generates going abroad.

Within the UK, the domestic market is having some transition with the new year coming online in South Wales in the near term, which could lead to an increase in domestic demands, but at the same time, there is some market expectation for continued growth across North Africa, but not too much expectation for real significant growth, at least in the nearer term. So, it's difficult to say if growth in the region will dramatically shift the seaborne scrap trading landscape.

There are also headwinds in policymaking, for example, the EU's waste shipment regulation, which will lead to stricter restrictions on shipments of non-hazardous waste like recycled metals, like recycled steel scrap, from the EU to non-OECD countries, which comes into force from late May 2027. Now, non-OECD countries can apply for inclusion to import non-hazardous waste, and Egypt and Morocco have both applied for inclusion. So, as we wait for that to come through the system, it's likely that they will still be able to receive material, particularly from the EU.

Elif: Well, thank you very much, Corey. And finally, as you know, CBAM and regional safeguard measures are reshaping steelmakers' fees/strategies. And how are these policies influencing scrap demand patterns?

Corey: Yeah. There's still a lot of lingering uncertainty within the markets over CBAM and the proposed safeguard mechanisms. So, how it will fully impact trading patterns and flows is quite difficult to say in the immediate term, especially as buyers and sellers grapple with the policy change. In the longer term, however, there is hope this will support domestic EU steel demand and market participants expect some increases in production, which have already been signalled for next year. And the market does anticipate this will lift scrap consumption within the EU. EU producers are also expected to add an additional 33 million tonnes a year in the air capacity by the end of this decade, which again is further supportive for scrap demand across the block. The big question is how demand for steel and steel production will develop, which market expectations seem apparently mixed on currently.

Elif: Well, that's all for this episode of "Argus Metal Movers." Big thanks to Corey for sharing his insights on all these regions and helping us unpack what CBAM would mean for scrap flows in the longer term. If you'd like to explore more coverage on steelmaking raw materials, feel free to reach out to us. And don't forget to subscribe to Argus Metal Movers wherever you get your podcasts. And until next time.