Steel Industry Insight

Buyers exert downward pressure on global scrap prices

It is observed that buyers in the international markets consider the current levels of scrap prices – which had been moving up since the middle of October – to be on the high side. While buyers have increased their downward pressure on global scrap quotations, scrap transactions have been concluded at lower levels than offer prices. HMS I/II 80:20 scrap offers from the Baltic region and the US to Turkey, the world’s biggest scrap importer, reached above $380/mt CFR in the first days of 2018, though they failed to gain acceptance from Turkish steel mills, and so ex-Baltic deals were concluded at significantly lower price levels as compared to initial offers. Following this development, suppliers in the Baltic region have reduced their offer prices, while US-based scrap suppliers have failed to meet Turkish steel mills’ price expectations under the current circumstances. Domestic scrap prices for the January buy-cycle have been determined in some regions of the US, with prices moving up by $20-30/mt depending on the scrap grade. On the other hand, since the ongoing harsh winter conditions are disrupting both scrap collection and transport activities, scrap suppliers in the US are expected to find it very difficult to meet Turkish steel producers’ price expectations in the short term.

On the other hand, Turkish steelmakers’ demand for scrap lacks strength. It is observed that only one Turkish steel mill has opened a tender for a short sea scrap purchase, while most Turkish mills are maintaining a cautious stance as regards purchases. Following the cancelation of the import duty on rebar in Turkey as of the start of 2018, it is heard that ex-CIS rebar deals have been concluded in Turkey at very low price levels. This news has received a negative reaction from Turkish steelmakers, while they are expected to make an announcement tomorrow, January 10. Having already met with obstacles in their major export markets and having begun to turn towards alternative markets, Turkish steel producers are now also facing difficulties in their domestic rebar market, causing them to remain cautious as regards scrap purchases.

An ex-Baltic HMS I/II 80:20 scrap deal in Turkey was concluded at $372-376/mt CFR at the end of last week, while an ex-Europe booking for the same grade was concluded at $366/mt CFR in the same period. In the meantime, an ex-Romania A3 grade scrap transaction was concluded at $343-344/mt CFR Aliaga. Although, no new scrap offer to Turkey has yet been heard in the current week, scrap suppliers are expected to target at least the price levels recorded in last week’s deals, while Turkish steel mills are foreseen to continue to exert downward pressure on import scrap prices as they try to make deals at lower prices as compared to last week.

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