The LME tells Kallanish that prices on its scrap contract rose month-on-month in October 2018 while those for rebar slipped slightly. Contract volumes traded dipped for scrap but continued to recover for the less-traded rebar on the same monthly comparison.
LME Steel Scrap traded the equivalent of 332,110 tonnes last month “… a slowdown on recent months, but still aligned with the average volumes recorded during the summer months,” the exchange says. LME rebar trades also rose again m-o-m to 47,310t, and “… volumes continued showing signs of recovery compared with the summer months.”
On Wednesday 31 October 2018, the LME Steel Scrap and LME Steel Rebar October contracts settled at $329.72/tonne and $498.98/t respectively, the exchange confirms. This constitutes a monthly change of +4.0% for scrap and -1.0% for rebar.
Both contracts continue to show open interest along the entire forward curve, with positions open up to 15 months forward. The presence of open interest on further dated prompts often suggests that the financial derivatives have been used to hedge physical exposure to the underlying commodity, the LME says.
The ‘scrap/iron ore ratio’ saw no major moves over the month and remained towards the lower end of its 2018 trading range. The ‘apparent conversion’ spread (i.e. LME Steel Rebar - LME Steel Scrap) consistently remained within its running 12-month average trading range. This possibly suggests “… that a new relative equilibrium may have been reached between input and outputs in the long steel market,” LME adds.