Having returned to the scrap markets last week to receive orders, the Turkish mills have this week resumed their suspension of booking activity in order to evaluate the course of the markets following the rapid price drops which have been observed.
The downtrend in prices is still continuing in the Turkish scrap market, where no ex-deep sea booking has been heard since the beginning of last week. It is heard that the price of ex-US HMS I/II 80:20 scrap, which found a buyer at the level of $539/mt CFR two weeks ago, has this week fallen below the level of $500/mt CFR. US domestic scrap prices are also currently registering a decline. As these prices fail to give an indication of how far scrap prices will drop, the Turkish mills prefer to wait and see rather than purchasing today and then having to face a lower level the very next day.
Meanwhile, it is seen that the Chinese mills have been concluding bookings from US West Coast ports in the past week. The booking level of these mills for HMS I/II 80:20 scrap has decreased this week to the level of $480/mt CFR, whereas it stood at $500/mt CFR in last week's bookings. In the event that strong demand will continue to come from China, thus resulting in insufficiency of scrap volumes at West Coast ports, then the Chinese mills may have to conclude scrap bookings from US East Coast ports instead. This situation may have an effect on the short-term purchasing strategies of the Turkish mills, which generally purchase scrap from US East Coast ports.
Moving to ex-Europe scrap, the downtrend in prices is observed to be continuing. The offer prices for ex-Europe HMS I/II 70:30 scrap have recently decreased to levels of around $450/mt CFR in Turkey.
Ex-Black Sea A3 grade scrap offers have further declined with the base price for Russian scrap exports at $510/mt. It is heard that in the Turkish market ex-Romania A3 grade scrap offers are currently standing at $460-470/mt CFR Turkey.
Should the Chinese steel mills increase their scrap imports from the US - the main supplier for Turkey as regards scrap imports - they will become an important competitor for Turkey in the international market. This situation may again put pressure on the demand side of the supply-demand equation. It is thought that the strategies of the Chinese mills, in addition to those of the Turkish producers, will prove influential for the future direction of the scrap markets.