Against the background of the low steel demand received from domestic and export markets, Turkish mills continue to buy deep sea cargoes at a slow pace. Deep sea scrap prices are still under downward pressure. While buyers and sellers agree that international steel supply and demand are not balanced, they also mention financial difficulties around the world. In this context, each scrap deal indicates a price decrease, whether small or big.
SteelOrbis has learned that an ex-UK booking was done by a Marmara-based producer today, July 26, for 18,000 mt of HMS I/II 80:20 scrap at $346/mt CFR. This price is $4/mt lower than the previous estimation made for this grade.
Another ex-US deal transacted by another Marmara-based producer has surfaced today, with HMS I/II 80:20 scrap standing at $350/mt CFR, though SteelOrbis has confirmed that this deal was done last week and is now considered old. SteelOrbis’ ex-US scrap reference prices will remain in the range of $354.5-355/mt CFR as fixed in transactions disclosed late last week.
Deep sea scrap prices have moved down gradually since the beginning of July, continuing the trend observed in June. Turkish mills are not having any luck finding opportunities in the export markets, and most of them say their costs will not allow them to do so in the future. “There is only little we can control in terms of costs. Energy costs are rising and cash flow is disrupted, making financial decisions more important than ever. Even though lowering the scrap price is not always a good thing, there is not much to do but to exert pressure on scrap prices,” a source at a Turkish mill said today. A contact from another producer stated, “[Steel] sales have been very bad for a while now. This is not sustainable for producers. I believe we may see some cuts in liquid steel production rates as of August.” Financial difficulties are not only experienced by Turkish mills. European contacts of SteelOrbis also indicate that the EU economy is also under pressure. A German source said, “Interest rates here increased from one percent to four percent. This is considered huge in Germany. Producers are planning longer stoppages in August for holidays.” While those stoppages mean lower scrap demand, they also mean lower scrap generation from industry. Having said that, there is the potential for a decline in Europe’s domestic scrap prices in August. Another European source said that European scrap suppliers should look for alternative markets instead of focusing on Turkey. SteelOrbis has reported today that imports of scrap are limited in Pakistan, exerting pressure on prices. Import scrap prices in India have been relatively stable, but bids have continued to fall. Trade activity in the import scrap market in Bangladesh has continued to lack strength amid continued issues with opening letters of credit (LCs) and buyers’ expectations of further declines. In this situation, Turkey’s chances of exerting pressure on prices seem high in the coming period. It should also be reminded that Turkey has not completed its deep sea scrap purchases for August shipments, and Turkish mills may decide to slow buying further if they decide to cut their production rates. “This will be a clear sign, and we should monitor the market closely to see their intention,” a seller commented.