Daily Market Note — 2026-08-03
Market commentary on the global ferrous scrap trade. Not trading advice.
The read
Geopolitics moved first today, and everything else followed from it. The United States paused a planned strike on Iran while regional parties pursue an agreement covering Iran’s nuclear programme and the reopening of the Strait of Hormuz, with Iran and Oman discussing a route arrangement. Brent crude fell more than 5% to around $83.44 per barrel, and OPEC+ approved an additional 188,000 barrels per day for September.
The important qualifier is that nothing physical has changed yet. Hormuz traffic remained reduced over the weekend, and normal transit has not resumed. Lower oil is an input to freight, not freight itself — carrier rates lag bunker costs by weeks, and war-risk premiums typically persist until insurers and shipping lines observe sustained normal traffic. The sensible reading is that the direction of freight risk has become two-sided for the first time in a week, not that relief has arrived.
Key moves
The LME steel scrap CFR Turkey forward curve closed with its first six monthly contracts at roughly $373, $380.50, $387.50, $393, $396.50 and $398.50 per tonne. The curve remains upward-sloping, and it is worth being precise about what that does and does not mean: the shape signals firmer expectations for later shipment, but the level sits materially below where the curve stood at the end of July — the deferred months are down roughly $10 to $15 per tonne against late-July readings. A steepening curve at a lower level is the market pricing a weaker prompt, not a stronger one.
Against that, physical Turkish scrap has not moved at all. Published import assessments have now held unchanged for five consecutive sessions, and the range published by one major assessor has been static for six issues. A forward curve is a financial reference; it is not evidence that a physical cargo has traded at those levels. When the two disagree this persistently, the physical print is the one describing actual transactions.
Pakistan imported 323,896 tonnes of steel scrap in June 2026 — up 24.2% on May and 64.9% year on year, with import value at $199.34 million. That confirms mills had letter-of-credit access and were actively buying. It also cuts the other way: cargoes booked in June are arriving now, which may reduce urgency to book more. No reliable public source published a nationwide live mill bid today.
Freight and shipping
No reliable public origin-to-Port-Qasim container rate was available today — a seventh consecutive session without one. Shipping through both Hormuz and Bab el-Mandeb remains exposed to security and routing risk.
For anyone sizing what a surcharge actually costs: a $500 charge on a single container is roughly $18.50 per tonne at 27 tonnes, or $20.00 per tonne at 25 tonnes. Small freight adjustments remove trading margin quickly, and the lighter the container loads, the worse the per-tonne impact. Any quotation worth acting on should identify the shipping line, routing, transshipment port, equipment availability, base freight, every surcharge itemised, validity, transit time, rollover risk, free days — and crucially whether emergency or war-risk charges can still be added after booking.
Supplier markets
European and UK suppliers are expected to resist immediate price reductions even with oil lower, pointing to the firm forward curve. EU rules restricting non-hazardous waste exports to non-OECD destinations apply from 21 May 2027, with the first approved-country list expected by 21 November 2026. UK suppliers sit outside the EU regime but remain subject to UK waste-shipment rules — “not EU” is not the same as “unrestricted.”
On the destination side, India maintains a 2.5% basic customs duty on aluminium scrap, and its recycling industry has asked for removal. India and Pakistan continue to compete for container equipment and supplier allocation, and a lower Indian CFR number is not a direct read-across to Pakistan once freight, payment terms, free days and import charges are accounted for.
Non-ferrous snapshot
LME levels: copper $13,800 per tonne, zinc $3,631, aluminium $3,179.
China’s first-half figures tell a mixed story. Refined copper imports fell 13% year on year to 1.374 million tonnes, but low Shanghai stocks and firmer import premiums point to renewed spot buying — falling imports and a tight spot market are reconcilable if the gap is being met from inventory. Refined lead imports jumped to 147,000 tonnes from 17,000 a year earlier, with scrap shortages cited as a constraint on secondary production. Aluminium semi-finished exports rose 15%, with Chinese and Indonesian supply offsetting part of the Gulf disruption.
The dissenting datapoint is zinc: China’s net refined imports fell 79% year on year to 38,000 tonnes as domestic smelting capacity expanded. That matters for brass, which prices off both copper and zinc — a firm copper leg does not imply a firm zinc leg.
Glossary
- CFR — Cost and Freight; the price includes shipping to the buyer’s port.
- HMS 80:20 — Heavy Melting Scrap, an 80/20 mix of two grades; the most common bulk ferrous scrap traded.
- Forward curve — the set of prices for future delivery months. It shows expectation, not transacted value.
- Bunker — marine fuel. Its cost feeds into freight rates, usually with a lag.
- War-risk premium — an insurance surcharge applied to voyages through areas of conflict risk.
- Yangshan premium — the physical premium paid for copper delivered into China above the exchange price.