LONDON (Commodity Online): Ferrous scrap swap trade has increased on rise in liquidity in the market with June-August traded at $420 per tone CFR Turkey on Tuesday, basis The Steel Index (TSI) and cleared by LCH.Clearnet for 1000 tonnes per month. The trade was brokered by GFI between a trader and a financial player, TSI said.
“TSI’s Turkish scrap index continues to trade in the Over-the-counter swaps market, on both a clear as well as un-cleared basis. Most trade is concentrated on the nearby month, as people look ahead to immedia te price movements/risks in scrap,” according to Tim Hard, Director of TSI.
"I believe cleared scrap swaps wil be a welcome additions to the basket of risk-management tools for the ferrous industry,” John Wright," a broker at GFI said.
“The market in general seems bullish that there is considerable demand to hedge volatile scrap prices. Monthly swings in price in excess of +/-6% are regular events. With an average price of US 450/tone, that variation of US $27/t might not sound like a lot, but for a short-sea sell of 5000 tonnes, it’s US$135,000 wiped off that boat’s value,” according to Jarek Miodziejewski, Ferrous Scrap Analyst at TSI.
“For a deep sea vendor delivering over 30,000 tonnes, it’s no laughing matter either. “ The April swap was around $430-435 per ton, according to the brokerage, Freight Investor service, March was at $430-440/t, with Q2 at $425-440 and Q3at $420-430. GFI said the March midpoint was at $430/ton, with Q2 at $425/ton and Q3 at $420 per ton. TSI reference price for HMS#1 &2. 80:20, CFR Turkish port was up US$9 /tone on Wednesday to US $442/ ton.
