Prices have been continuing to drop in the Turkish scrap market during the current week. In the markets which some ex-deep sea scrap bookings were heard, it is observed that the prices of concluded bookings have shown further decreases compared to the previous week.
Within the last twelve months, the development of the scrap markets, as well as of the steel markets in general, has been quite strange. At this time last year, the price of ex-deep sea scrap stood at $350/mt CFR Turkey ports; six months later, at the end of April 2008, prices had shown an increase to the level of $700/mt CFR, whereas currently they stand at just $150/mt CFR. Given such wide fluctuations, it seems quite difficult to make a prediction about when the scrap prices are likely to hit bottom. Against the background of the price drops seen in most scrap markets in line with the direction of the finished steel markets, scrap collection activities are showing a slowdown. This situation supports the possibility of supply tightness, especially when the approaching winter season is taken into consideration.
While at the end of last week ex-Europe HMS I/II 80:20 scrap was offered at a level of about $140/mt CFR, it was sold at $131/mt CFR at the beginning of the current week. The maximum levels registered by the euro against the dollar when compared to recent years and also the continuously decreasing prices seen in the European domestic market have both affected the ex-Europe scrap prices. Meanwhile, ex-UK HMS I/II 80:20 scrap was purchased by a Turkish mill at $150/mt at the beginning of this week.
Since the mills which are conducting overhauling activities or cutting production are not showing any interest in purchasing scrap, the prices of this raw material have recorded a significant drop and reached the level of $100/lt. In addition, in the Turkish market an ex-US scrap cargo has been offered at about $140/mt CFR.
On the other hand, ex-Russia A3 grade scrap, which is still at high cost levels, is currently being offered to Turkish mills at about $200/mt CFR. Although ex-Romania A3 grade can be found below the price level in question, it has not yet decreased sufficiently to be able to compete with the levels of ex-Europe or ex-US scrap offers.
In conclusion, it is thought that the Turkish mills which have rolled back their production will need to purchase scrap, though it is impossible to predict the amount of these purchases for the time being. The production strategies that will be chosen according to the direction of the finished steel markets will determine the quantities of the scrap purchases in question.