Having temporarily delayed their scrap purchases in September in order to avoid incurring losses in the event of a sudden price decrease, Turkish mills have become convinced that prices will not drop much further from now on; however, they are still in dispute with suppliers over price levels. On one side of the fence stand the Turkish mills who do not intend to pay more than the level of $340/mt CFR Turkish ports for HMS I/II 80:20 scrap, also on account of the effect of the weak longs market. On the other side of the fence stand the ex-deep sea scrap suppliers who are finding it impossible to cope with the highest historical freight rate levels and with the €/$ exchange rate. As a result, they are having great difficulty in lowering their price offers for HMS I/II 80:20 scrap below the level of $345/mt CFR Turkish ports.
Despite this situation, some bookings, though not many, are being concluded under more favorable conditions for producers. For example, in a scrap booking ex-deep sea concluded last week, HMS I/II 90:10 scrap found a buyer at the level of $340/mt CFR; shredded scrap was booked at $345/mt CFR and P&S scrap was at a level of $350/mt CFR Turkey. Nevertheless, we think that it could be misleading to compare such bookings with the previous ones and to arrive at the conclusion that prices in the market are declining. In the current market conditions, we see that the scrap bookings concluded under relatively more favorable conditions constitute rare and particular cases. Looking at the overall picture, as already mentioned above many ex-deep sea scrap suppliers are finding it next to impossible to lower their offers for HMS I/II 80:20 scrap below the level of $345/mt CFR due to the high costs.
The same situation applies for A3 grade scrap ex-Black Sea and for scrap ex-short sea. The price offer for A3 grade scrap ex-Black Sea hovers above the level of $345/mt CFR Turkish ports.
In the markets where distressed conditions are prevailing at this time of the year as winter approaches, we think that it is difficult to expect a decline to be seen in scrap prices in the short-term, especially given the current freight rates and the €/$ exchange rate.