Scrap's rising importance in the steel market and recovery in risk tolerance

Freight Up! Fuel oil, iron ore, steel and other commodity insights from Freight Investor Services

As steel prices continue to fall and demand remains low, a critical resource is becoming increasingly important - scrap. But with concerns over maintaining the supply of scrap, the scrap market is seeing significant volatility and a shift towards a contango environment. Will anyone be able to lock in profits and manage their cash flows amidst this perfect storm? Find out in this week's episode of Freight Up! from FIS.Fuel Market Update The fuel market bears significance to the steel industry due to geopolitical tensions in shaping the oil sector. Investors in the steel domain should be aware of events like the crackdown on imports of Indian fuel refined from Russian crude or America's plan to refill the Strategic Petroleum Reserve. Archie Smith shares his observations on the fuel market and its interplay with the steel industry. He discusses the EU's measures against Indian fuel imports from Russia and emphasizes the significance of the Sing 0.5 spread, high sulphur fuel oil cracks, and the resulting market squeeze. Steel Market Update Aspects of the steel market like demand from OEMs and interest rates have the power to drive changes in the physical markets. The industry has recently witnessed a shift in sentiment around scrap, making it an essential input for investors to track. The scrap curve moving into a contango environment and the overall volatility calls for investors to stay vigilant, lock in margins, and manage their cash flows in the face of these challenges. Joshua Stern offers his valuable insight on the steel market and talks about mis-pricings or opportunities arising from the ongoing challenges. Ferrous Complex Update Changes in global demand, supply chain disruptions, and environmental concerns can impact commodity markets, which in turn, affect the steel industry. Keeping an eye on the state of the commodity market provides crucial insights to investors for timely decision-making. One notable example is the recent spike in commodity prices, attributed to various factors such as Chinese demand, supply chain hiccups, and environmental considerations. This awareness of market movements can help steel investors make strategic moves and navigate through uncertainty. Hao Pei delves into the issues affecting the commodity market and its influence.Ask Hao Pei for his FIS Macro report by contacting him via LinkedInUSDA Predicts Increase in Chinese Corn Imports Kerry Deal shares his thoughts on the potential growth opportunities in the Panamax market, backed by the USDA's optimistic predictions about Chinese imports. He talks about his stance on Capes from a macro perspective, and highlights how he believes that the positive outlook for grain imports to China can result in a brighter path for the Panamax market in Q3. The key moments in this episode are: 00:00:00 - Introduction 00:01:01 - Fuel Market Update 00:05:15 - Ferrous Complex Update00:09:20 - Steel Market Update00:14:45 - Opportunities in Mispricings 00:16:31 - Shocking Week for Cape Rates 00:18:03 - Panamaxes Present a Grim Picture 00:19:16 - USDA Predicts Increase in Chinese Corn Imports