After intensive scrap buying in June, Turkish producers last week started to take a break from their scrap purchase activities as they had failed to see any improvement in rebar demand. Decreasing scrap demand has not yet influenced ex-deep sea prices in Turkey; however, the drop in demand has caused local Turkish market prices to decrease today, July 7, by approximately TRY 15/mt to TRY 320/mt ($208/mt).
No deals or offers from the US have been heard so far this week. Although demand from producers in the Far East still exists, the local US scrap market is currently very strong as the US mills have been resuming their production operations. This situation is currently preventing ex-US scrap prices for Turkey from entering a downtrend. It is thought that the price level of ex-US HMS I/II 80:20 is currently at least at the level of $280/mt CFR, whereas it was at $280/mt in a deal reported two weeks ago.
In Europe, while demand for scrap is considerably sluggish, supply also lacks strength for the time being. Due to the upcoming holidays, no improvement is expected on the supply side. After the latest ex-Europe HMS I/II 70:30 scrap deal in Turkey at the price level of $270/mt CFR, no offer at a lower price level has been heard yet.
Some deals have been heard for small tonnages of ex-Black Sea A3 grade scrap at $270-275/mt CFR Turkish ports. It seems that some suppliers who do not want to go below their price level of $280/mt CFR have withdrawn from the market and are currently not offering material. In the Black Sea region, scrap supply may register a decline as the harvest season is approaching; meanwhile, freight rates may start to increase due to the same reason.
Turkish producers have not yet started their purchases for August shipments. Their scrap purchase activity is at present very closely linked to the situation in the global finished steel products' market, just as it has been since the beginning of 2009. Thus, in order to ensure the continuity of their production operations, it is thought that Turkish producers may start their scrap purchase activities for August shipments in a week or two.