International scrap prices continue climbing

Wednesday, 22 March 2006 12:10:03 (GMT+3)   |  
       

Scrap prices, which have been following an upward trend, continue climbing without giving any break. We mentioned the upward trend in scrap prices in our previous analysis and revealed our expectation that Turkish mills, which were not active in buying, would sooner or later start their purchases. However, according to market sources, contrary to the expectations, not many bookings have been concluded in Turkish scrap market, and Turkish mills have not preferred to conclude many purchases at higher prices with the expectation that the prices would start to soften. On the other hand, traders report that although mills have started purchases for May shipments, purchases for April shipments have not been completed yet. In fact, this is one of the reasons that has triggered the rise in the markets. It means, Turkish mills indicate that they accepted concluding purchases below the actual market level with the expectation that prices would decline, while suppliers slow down scrap collection since they find the prices given by Turkish mills low. For Turkish mills, which need around 1.3 million tons of scrap a month, imbalance in supply-demand and tightness in supply are among reasons that impact prices negatively. Moreover, European mills, which were not very active during winter, have become active as of early March in terms of purchases. When we look at the current situation in the market, we see that offers given by suppliers of European and US scrap, which we call deep sea scrap, are at $260/mt CFR Turkish ports for HMS I/II (80:20), at $252/mt CFR Turkish ports for HMS I/II (60:40) and at $265/mt CFR Turkish ports for shredded scrap. Even if there are bookings of A3 grade Black Sea concluded from Baltic Sea at $256/mt CFR Aliaga, offers given by Black Sea suppliers for A3 grade scrap are at around $265/mt CFR Turkish ports. Meanwhile, prices of billets and finished steel products have increased in line with the increase of scrap prices. The strong demand for billet and finished steel products both in local and export markets offset the rise in scrap prices. It seems that the uneasiness in finished steel market in the previous weeks has partially disappeared. However, the upward trend in the prices, and more importantly the fact that it is unpredictable to what extent the scrap prices will increase and when the softening will take course create concern in the market.

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