Apart from small tonnage ex-short sea scrap bookings, Turkish mills had broken a record by not concluding any ex-deep sea scrap purchases for a full seven weeks. However, in the past week, the Turkish producers gradually started to return to the deep sea scrap market and receive offers. Some of these offers, mainly taken in order to test the state of the market, resulted in bookings.
Last week, a European-based scrap supplier made an offer to the Turkish mills for HMS I/II 70:30 grade scrap at $510/mt CFR. In the same week, it was heard that another European-based supplier made an offer to the same market at $540/mt CFR for HMS I/II 80:20 scrap. Nevertheless, it was reported that neither of these offers resulted in sales. The recent downtrend in the €/$ exchange rate is also influential as regards ex-Europe scrap prices, which have been marking a decline due to the insufficient levels of demand. With the low €/$ exchange rate, ex-Europe suppliers will have a great advantage compared to ex-US suppliers in the export markets. The HMS I/II 70:30 offer given to the Turkish mills two weeks ago at around $520/mt CFR in the context of a €/$ exchange rate at 1.55 has since declined to $439/mt based solely on today's €/$ exchange rate at 1.47, even without seeing any decrease in its market price. Therefore, if the €/$ exchange rate hovers at low levels this week, a further slide is expected in the prices for ex-Europe scrap offers in the Turkish market this week. It is heard that an ex-Europe supplier, who offered HMS I/II 70:30 scrap at the level of $510/mt CFR in the past week, has lowered its offer price down as far as $458/mt CFR as of today.
In a US scrap booking concluded at the beginning of last week, a Turkish mill purchased 30,000 mts of HMS I/II 80:20 scrap at $539/mt CFR and 10,000 mts of P&S scrap at $559/mt CFR for September shipment. When compared to the other ex-deep sea offers for HMS I/II 80:20 scrap, it can be said that this booking price, which was obtained by one of the largest scrap suppliers in the world, is neither low nor high and that it reflected the actual levels in the markets last week. However, it is likely that the ex-US suppliers will further lower their prices as they will be competing this week with the ex-Europe scrap prices, which are expected to see a further drop under the influence of the €/$ exchange rate.
In the latest bookings, the price for ex-Black Sea A3 grade scrap stands at around $520/mt CFR Marmara. With the Russian government's latest decision to maintain the 15 export percent duty and raise the indicative scrap price to the level of $510/mt, an additional burden of $22.5/mt has been imposed on scrap exported from Russia. As a result of this measure aimed at keeping scrap supplies in the Russian domestic market, it is foreseen that the amount of A3 grade scrap in the Turkish market - which has already declined - will further decrease. Moreover, the issue of the tax increase is still on Russia's agenda.
As regards this week, it is estimated that a few deep sea scrap bookings for late September/October shipment may be concluded in the Turkish market, even though not being very active.