We stated in our previous market analysis that Turkish mills were expecting to see a drop in scrap prices in line with the decline in the long products market. These expectations even caused Turkish mills to delay their scrap purchases for a considerable period of time. Having made scrap purchases almost at minimum levels in September, the Turkish mills returned to the market last week, having been convinced that scrap prices would not go down to the levels they had been expecting. Many scrap bookings ex-deep sea have been concluded in the market at the following prices:
Shredded scrap ex-deep sea |
$346-348/ mt CFR Turkish ports |
HMS I/II 80:20 ex-deep sea |
$341-343/ mt CFR Turkish ports |
HMS I/II 70:30 ex-deep sea |
$330-331/mt CFR Turkish ports |
A3 scrap ex-Baltic Sea |
$345.50/ mt CFR Turkish ports |
While deep sea scrap suppliers say that the price level should be far above these prices, also due to the influence of the high freight rates (freight rate for US East Coast to Turkey is approximately $70/mt), the sluggishness in the long products market has made it difficult for the mills to accept prices at the above-mentioned levels. In the end, these levels were agreed upon and are foreseen to be maintained in the short term.
With regard to the Black Sea, high freight rates have continued to prevail. As a result of the freight prices, which have indicated a rise of 50 percent within 1.5 months, the freight rates from Russia to ports in the Marmara Sea have reached a level of $50/ mt. On the one hand, the suppliers here are having difficulty in dropping below the level of $345/mt CFR; on the other hand, Turkish mills do not intend to pay these prices, also due to the effect of the weak longs market. With freight rates at these levels, it seems hard for ex-Black Sea scrap suppliers to do business.