The ongoing increases in scrap prices are foreseen to continue for another while, with the influence of the floods seen in Australia.
Due to the floods in northeastern Australia, Australian mining giant Rio Tinto announced force majeure on coal shipments from its four mines in the region. Various miners have followed suit, resulting in a 55-60 percent reduction in the volume of ex-Australia coal offers. It is reported that iron ore supplies have also been affected by the flood. In order to compensate for the resulting shortfall in iron ore supplies, integrated steelmakers are expected to focus more on scrap, leading to a likely increase in world scrap demand.
Last week, Turkish steel producers concluded only a limited number of scrap transactions, due to the absence of scrap suppliers because of the holiday. In the US market, scrap prices have increased by up to $60/mt as expected, depending on the quality of the material. It is reported that US scrap supplies are still unable to meet domestic and foreign scrap demand. While no new ex-US scrap offers for Turkey have been heard so far this week, scrap prices are anticipated to exceed the $500/mt level.
Following last week's latest ex-European scrap transaction to Turkey at $476/mt CFR for HMS I/II 70:30 scrap, no scrap offers have been heard from Europe this week.
After the conclusion of an ex-Russia A3 scrap transaction to Turkey at $475/mt CFR Marmara, new scrap offers from this source are thought to be higher than $480/mt CFR.
It is anticipated that Turkish producers will take their next steps as regards scrap bookings considering abovementioned factors as well as the current situation in the finished steel markets.