Daily Market Note — 2026-08-05

Market commentary on the global ferrous scrap trade. Not trading advice.

The read

The direction of travel reversed again, for the fourth time in five sessions — and the most useful number published today quietly undercuts the headline.

Shipping traffic through the Strait of Hormuz rose to eight vessels on Tuesday, from six on Monday. The United States and Iran reported positive discussions, and an interim arrangement to reopen the strait may be announced, though no final agreement has been confirmed. Brent crude fell below $80 a barrel on the news, having been near $85 a day earlier.

Here is the number that matters, and it is the first time it has been put alongside the daily counts: the pre-war norm for Hormuz was roughly 130 to 140 transits a day. Against that baseline, six vessels is about 4.5% of normal and eight is about 6%. Traffic did increase — but a move from 4.5% to 6% of normal throughput is noise inside a corridor that is effectively closed. Read that way, a fortnight of coverage describing “reduced traffic” has been understating the situation rather than overstating it.

Bab el-Mandeb traffic held near 20 vessels, also below normal.

The distinction that has done the most work over the past week still holds: separate what is announced from what is observed. Diplomatic progress is real and may prove decisive. Vessel counts and freight rates are what actually price cargo, and neither has yet moved in a way that would justify repricing a voyage.

Key moves

For the first time in more than a week, published container-freight data is available — and it deserves careful reading.

Drewry’s World Container Index fell 3% to $4,255 per 40-foot container on 30 July. Drewry’s Intra-Asia Container Index held flat at $956 per 40-foot container. Over the same week, Shanghai–Jebel Ali rose 6%.

Three qualifications change what that set means. Both Drewry assessments are 30 July data, so they predate the vessel strike reported in the Strait of Hormuz on 4 August entirely. The World Container Index is a global composite weighted toward transpacific and Asia–Europe trades, not a Gulf or South Asian lane. And the one route in the group that shares a risk corridor with Gulf-bound cargo — Shanghai–Jebel Ali — went up 6% while the global composite went down. On the figures actually published, regional Gulf freight is firming even as world container rates ease.

In ferrous, the latest reported ex-UK HMS 1/2 80:20 physical booking remained near $368 per tonne CFR Turkey. Near-month LME steel scrap CFR Turkey futures references sat in the high $370s to low $380s, with the second monthly position quoted near $380.

The gap between those two figures is the story. Every transaction observed in the last two sessions has cleared below every quoted forward reference: the ex-UK booking at $368, a US-origin cargo reported concluded at $375 against mill bids near $370, and Turkish mills reported unwilling to pay above roughly $365 per tonne for EU-origin material. A forward curve describes expectations for later delivery months. It does not establish what a physical cargo is worth into a particular destination today, and this week the two are pointing in different directions.

Pakistan imported 323,896 tonnes of steel scrap in June 2026, up 24.2% from May and 64.9% from June 2025. Worth keeping alongside it, from earlier reporting: first-half imports still ran below the same period of 2025, so a strong month sits inside a weaker half-year. No reliable public source published a nationwide live mill bid today.

Freight and shipping

No reliable public all-in origin-to-Port-Qasim rate was available from the UK, Belgium, Canada or the United States — a ninth consecutive session without one. That gap is now conspicuous: an escalation, a de-escalation, a re-escalation and a second de-escalation have all passed without commercial rates on that lane being observed to move in either direction.

The useful arithmetic, with a second tier added: a $500 charge on a single container is about $18.52 per tonne at 27 tonnes, or $20.00 per tonne at 25 tonnes. A $250 charge is about $9.26 per tonne at 27 tonnes, or $10.00 at 25 tonnes. Lighter-loading containers absorb the worse per-tonne impact, which makes loading discipline a freight-cost lever rather than a logistics detail.

Any quotation worth acting on should separate base ocean freight, bunker adjustment, war-risk charge, emergency surcharge, origin charges, transshipment charges, equipment charges and destination charges — and should state whether any of them can be revised after booking, gate-in or sailing. Lower oil does not automatically produce lower freight: bunkers are an input to a carrier’s cost, not the rate itself, and war-risk premiums persist until insurers observe sustained normal traffic.

Supplier markets

European and UK suppliers are expected to continue quoting against the forward curve until physical Turkish business moves. The counter does not require taking a market view: ask which physical booking, dock-price movement or freight increase sits behind the request, and ask for material price, inland transport, port charges and ocean freight to be shown separately.

EU rules restricting non-hazardous waste exports to non-approved non-OECD destinations apply from 21 May 2027, with the first approved-country list expected by 21 November 2026. Country-level approval may not automatically cover every individual receiving facility; plants are expected to hold environmental permits, process descriptions, capacity records, evidence of downstream use and documented waste-handling procedures. UK suppliers sit outside the EU regime but remain subject to UK waste-shipment and destination rules — “not EU” is not the same as unrestricted.

Pakistan applies separate tariff lines to different scrap types, and regulatory-duty treatment varies by HS code. There is no single scrap duty rate. A complete landed-cost calculation needs the exact eight-digit code plus regulatory duty, customs duty, additional customs duty, sales tax, withholding tax, cess, the customs valuation basis and any exemptions — and the valuation basis matters, because duty is assessed on customs value rather than simply on invoice CFR.

Non-ferrous snapshot

LME levels: copper $14,070 per tonne (up $194, or 1.40%), aluminium $3,236.50 (up $24.50, 0.76%), zinc $3,672.50 (down $5.50, −0.15%). Copper’s first print above $14,000 in this series.

Today’s session is more informative than yesterday’s, and the reason is the divergence rather than the level. On 4 August all three metals rose together with closely grouped percentage gains, which is consistent with a broad macro or currency move and cannot distinguish that from a metal-specific squeeze. Today copper rose 1.4% while zinc fell — a pattern a complex-wide bid does not produce. That makes today the first session genuinely supportive of the copper-specific explanation: heavy accumulation in US warehouses, falling Shanghai inventories and firmer Chinese import premiums.

Two cautions against over-reading it. One session is one session. And the cleanest available test of whether this is a genuine prompt squeeze — the shape of the LME cash-to-three-month spread — remains unpublished in the commentary flow; a rally into a widening backwardation and a rally into an unwinding one mean close to opposite things.

Over the fuller move from 30 July, copper is up 3.40%, zinc 2.61% and aluminium 1.87% — so copper has retaken the lead from zinc, which had outpaced it earlier in the week. Anyone valuing brass, which prices off both metals, should recompute on live copper and live zinc rather than assuming either leg leads; that ranking has now flipped twice in five sessions.

Aluminium futures remain below their June peak, with Chinese and Indonesian supply offsetting part of the Gulf disruption, though physical premiums are reported firmer than the futures price implies. China imported 147,000 tonnes of refined lead in the first half of 2026 against 17,000 tonnes a year earlier, with scrap shortages cited as a constraint on secondary production — a figure now several weeks old and not refreshed.

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.
• Backwardation — when the immediate price sits above the forward price, generally a sign the market is paying up for metal available now.
• Bunker — marine fuel. Its cost feeds into freight rates, usually with a lag of weeks.
• War-risk premium — an insurance surcharge applied to voyages through areas of conflict risk.
• Container index — a published average of container freight rates across a defined set of routes. A global composite need not reflect any single lane.
• HS code — the international tariff classification that determines what duty a cargo pays on import.