While Turkey’s import scrap market has remained silent this week, market players’ price ideas have declined. Turkish mills have been asking for closer to $350s/mt CFR for ex-EU HMS I/II 80:20 scrap and $360s/mt CFR for ex-US cargoes. Although these levels have not been realized yet in actual confirmed deals, most market players think there is room for prices to soften.
Turkish mills, citing the lack of strong demand in their domestic steel markets, now say the most recently recorded levels in the deep scrap segment are on the high side. Steelmakers’ profit margins are shrinking each day due to increasing production costs. SteelOrbis calculates the conversion cost from scrap to rebar at around $210/mt, while foreseeing that costs will increase in the coming period. Major Turkish mills have cut their domestic rebar quotations this week and, even at the lower levels, demand for rebar has remained sluggish.
Scrap suppliers’ willingness to cut offer prices shows that Turkish mills’ reluctance to conclude deals is forcing some sellers to consider their positions. SteelOrbis has heard that some sellers from the Baltic region have cut their offers to Turkey to the range of $360-365/mt CFR. Some European scrap sellers have shared offers to Turkey in the range of $350-355/mt CFR. Meanwhile, European suppliers still report significantly slow scrap flow to yards, with collection prices mainly standing at around €290/mt DAP, but this is certainly not their current average inventory cost since they started collection at higher levels. Also, a couple of ex-US cargoes are offered at around $360/mt CFR Turkey. While the US domestic scrap market is expected to move sideways in November, it is too early to make a concrete assumption.
Alternative markets are also declining. Another drop in import scrap offer prices in Pakistan has been recorded this week, which has resulted in only occasional deals, while in general many Pakistani buyers have remained inactive due to slow end-user demand. Import scrap prices in India have softened amid muted demand against the backdrop of weak rebar prices and the local currency continuing to seek new historical lows, which increases the costs of import trade.
As a result, SteelOrbis has decided to revise its benchmark HMS I/II 80:20 scrap prices downwards. Ex-Europe scrap prices have been revised to $355/mt CFR, while ex-US and ex-Baltic scrap prices are revised to $360-365/mt CFR since no deals have been done yet.
On the other hand, the pressure on short sea scrap prices is stronger as usual. Two ex-Romania scrap deals were closed to Turkey at $330/mt CFR Marmara. This level is $5/mt lower than the previously closed bookings. SteelOrbis hears that prices lower than this level are easily achievable. A seller of scrap from Romania and Bulgarian said prices closer to $320s/mt CFR may be seen before the current round of sales is over.