At the SteelOrbis Fall '08 Conference and 59th IREPAS Meeting in Hamburg held at the beginning of this week, one of the most important questions to which participants sought an answer was; when are scrap prices - on a continuous decreasing trend nowadays - likely to hit bottom? Bad news of the falling domestic markets in the US, Europe and Russia, which are the main suppliers of scrap, continue to be heard almost everyday. The most important factors behind the price decreases are the lack of demand seen in the finished steel markets and the resulting decreases in scrap demand from producers that have had to cut or halt production. The markets are expected to find a new equilibrium in some way, after a recovery is first seen in the finished steel markets, thereby boosting steel trade which is now almost at a standstill.
Over the last week, the prices in some scrap bookings heard in the Turkish market showed considerable variation. The main reasons for this are the stock levels or the financial situation of the suppliers. It is seen that the suppliers who are interested in selling their inventories as soon as possible are able to lower their prices further. Ex-Baltic scrap bookings made over the last week were at the levels of $210-225/mt CFR, whereas ex-US scrap bookings found a buyer at $200-210/mt CFR. As we reported in our price reports section in detail, an ex-Europe scrap cargo was sold at the level of $180/mt CFR.
The predominant view in the market is that if demand for scrap does not receive a boost, prices will continue to go down and even the level of $150/mt CFR by the end of the current week would not be a surprise. It is observed that the scrap suppliers, who face discounts or cancellation requests for their sales due to the reduced prices, are in a difficult situation and are hoping that the markets will regain their equilibrium as soon as possible.