Moving on a rapid price uptrend since early March, the scrap markets are not expected to decline in the short term. With new domestic prices in Europe and the US for April currently being awaited, there is a very high probability that new increases will be seen.
Having increased from $423/mt CFR to $450/mt CFR last week in Turkey, the price of HMS I/II is this week heard to be at the level of $455/mt. After concluding deals for over 40 cargoes, the Turkish mills are now expected to slow down their scrap purchases a bit. However, on the other hand, the Chinese mills, which have been postponing their scrap purchases due to the lack of resolution in the iron ore negotiations, are more likely to start scrap purchases after their holiday at the start of next week. In the US, domestic scrap prices for April are expected to be at best $40/mt higher as compared to March levels. Also, in Vietnam ex-US scrap prices have got closer to the level of $500/mt CFR.
Ex-Europe HMS I/II 70:30 transactions had last week increased to the level of $442/mt CFR. The price increase of €70/mt in the space of just three weeks in the Italian domestic market has created an uncomfortable feeling in the markets. Ex-Europe HMS 70:30 scrap offers to Turkey this week are thought to be at $445/mt CFR and above.
A3 scrap ex-Black Sea is currently standing at about $450/mt CFR. The latest transaction was at the level of $445/mt CFR, while the price level of $450/mt has not been accepted yet. Short sea scrap offers like ex-Lebanon, ex-Algeria and ex-Israel are heard to be in the range of $435-440/mt CFR.
The Turkish mills had previously felt at ease in scrap purchases after the demand improvements seen on the product side. However, the rapid increases in both product and scrap prices, recalling the collapse after the rapid prices hikes in 2008, have created anxiety.