The Turkish mills have continued to hold back from making purchases, as they are still waiting for the finished steel markets to gain clarity in order to determine their scrap procurement strategies. With the expectation that the slow demand in the finished steel markets will pick up with the conclusion of Ramadan, Turkish mills are keeping a close eye on demand, in particular on demand in the Gulf countries. Should the demand for rebar increase, prices will gain clarity and light the way for Turkish mills' scrap procurement strategies. However, should demand fail to increase, the mills who have had to stock up finished steel products for a long time now will try to find alternative solutions such as slowing down or halting production.
The price level in the Turkish domestic market showed a decrease again on October 6, with the HMS I scrap price dropping to the level of YKR 300/kg ($220/mt). However, with no demand seen for scrap, some mills have announced that they have stopped their scrap purchases from the domestic market.
With the low demand and decreased prices, as well as the €/$ exchange rate which has declined to 1.35, ex-Europe HMS I/II 80:20 scrap offers have slipped below the level of $300/mt CIF, while offers for HMS I/II 70:30 are standing at around $280/mt CIF Turkey.
There are no ex-US scrap offers currently heard in the Turkish market. If Turkish mills intend to purchase ex-US scrap, it is thought that the suppliers of HMS I/II 80:20 scrap, who have high stock levels in hand and expect prices will go down further, will accept levels at around $300/mt CFR Turkish ports. Meanwhile, suppliers whose financial resources enable them to wait longer will hold out for higher price levels.
For now, it seems impossible for ex-Russia A3 grade scrap to compete with other markets due to the high level of scrap consumption in the Russian domestic market, and due to the high freight costs and export tax. However, Romania can accept the level of $300/mt CFR Turkey ports with the advantage of reasonable freight costs and no export tax on scrap.
In general, it has become very difficult at the current juncture to analyze scrap markets and prices due to the slackness of trading activities; the actual truth of the situation will only be revealed by price levels which gain general acceptance. For this to be seen Turkish mills will have to start their scrap purchases and the market will need to show some recovery. Currently, against the background of the financial crisis and sluggishness (not to say shrinkage) seen globally, it is quite difficult to make predictions about the scrap markets, even for the short term.