Daily Market Note — 2026-08-04

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

The read

Yesterday’s story was de-escalation. Today’s is the opposite, and it arrived within a single session.

A cargo ship was reported struck by an unidentified projectile in the Strait of Hormuz, and shipping traffic through the strait remained extremely low — only six vessels transited on Monday, all of them using the Iranian route. Brent crude rebounded to roughly $85.12 per barrel, giving back around a third of the fall that followed the weekend’s diplomatic news.

The distinction worth holding onto is between what is announced and what is observed. The diplomatic track reported on 3 August — a paused strike, talks over a Hormuz route arrangement — has not been retracted; it simply was not the news today. What happened today was a vessel being hit. Both readings are live, but only one of them is an observation, and that asymmetry is why a week of oil-price swings has not yet produced a single confirmed change in commercial freight rates in either direction.

For anyone pricing cargo, this is the practical consequence: an input that has reversed direction twice in forty-eight hours cannot support a long-dated fixed price. The exposure has also changed shape. Last week the risk was that freight might fall and leave a seller locked into an over-priced quote; the risk now is a war-risk or emergency surcharge levied after a booking is made, against a price already agreed.

Key moves

The LME steel scrap CFR Turkey forward curve, on data valid for 3 August, closed its first six monthly contracts at roughly $373.65, $376.50, $382, $385.50, $393 and $392 per tonne.

Two things stand out. First, the level fell again — every deferred contract is lower than the previous reading, by roughly $3.50 to $7.50 per tonne. Second, and more unusual, the back of the curve has inverted: the sixth month prints about a dollar below the fifth. A forward curve that is falling across the deferred months and inverting at the far end is not describing rising confidence. It is worth being blunt about this, because a rising-looking curve is frequently cited as evidence of a firm market: the slope from front to back is still positive, but a strip that drops at every deferred tenor while flattening is the market marking expectations down, not up.

Physical Turkish scrap tells a consistent story. One major assessor’s general 80:20 index broke a multi-session freeze, easing to about $373.50, with its EU-origin line down to around $368.50. Turkish mills were reported unwilling to pay above roughly $365 per tonne CFR for EU-origin material as finished-steel sales stay weak. A separate US-origin index has now held unchanged for six consecutive sessions — the longest flat run in that series — which says the softening so far is origin-specific rather than a general re-rating.

Pakistan imported 323,896 tonnes of steel scrap in June 2026, up around 65% year on year. The important qualifier, and it is new: first-half imports still ran below the same period of 2025. A strong month inside a weaker half-year is a rebound from a low base rather than an expansion in run-rate — a useful corrective to reading the June figure as evidence of a demand surge. 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 — an eighth consecutive session without one. That is now notable in itself: an escalation, a de-escalation and a re-escalation have all passed without commercial rates being observed moving in either direction.

The useful arithmetic remains unchanged: a $500 charge on a single container is roughly $18.50 per tonne at 27 tonnes, or $20.00 per tonne at 25 tonnes. Lighter-loading containers absorb the worse per-tonne impact. Any quotation worth acting on should separate base ocean freight, bunker adjustment, war-risk charge, emergency surcharge, origin charges, transshipment charges and equipment charges, and should state clearly whether any of them can change after booking. That last point is the one that matters most this week.

Supplier markets

European and UK suppliers are expected to keep resisting reductions, citing the forward curve. The counter is straightforward and does not require taking a market view: a forward curve reflects expectations for later delivery months, and it does not establish what a physical cargo is worth into a particular destination today.

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. A point that deserves more attention than it usually gets: country-level approval may not automatically cover every individual receiving facility. Plants are expected to hold environmental permits, capacity records, process descriptions and evidence of downstream use. Buyers and suppliers who assemble that documentation early will have an advantage over those waiting for the November list.

Pakistan applies separate tariff lines to different scrap types, and duty treatment varies by HS code. There is no single scrap duty rate, and treating classification as a back-office detail is how landed-cost calculations go wrong.

Non-ferrous snapshot

LME levels: copper $13,876 per tonne, zinc $3,678, aluminium $3,212. All three rose, and their percentage gains were closely grouped — zinc up about 1.3%, aluminium 1.0%, copper 0.6%.

That grouping is worth noting, because copper has been widely explained by a specific story: heavy accumulation in US warehouses alongside falling Shanghai stocks and firmer Chinese import premiums. That story may well be right, but three unrelated metals rising together on the same day looks more like a broad macro move than three independent physical squeezes, and a day like this does not distinguish between them.

One correction to a widely-repeated view. Zinc has been described for over a week as capped, on the strength of a first-half figure showing Chinese net refined imports down 79% year on year to 38,000 tonnes as domestic smelting expanded. That is an argument about China’s refined import channel, not a forecast of the exchange price — and the two have diverged. From 31 July to 4 August, zinc rose about 2.8% against copper’s 2.0%. Zinc has led, not lagged. For anyone valuing brass, which prices off both metals, that matters: the zinc leg is currently contributing more to blended value, not less.

China imported 147,000 tonnes of refined lead in the first half, 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.
• Inverted curve — when nearer months price above later ones, generally read as the market expecting weaker conditions ahead.
• 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.
• HS code — the international tariff classification that determines what duty a cargo pays on import.