SteelOrbis has been informed of several recent ex-US scrap deals to Turkey. In the past few days, Turkish mills acquired HMS I/II 80:20 scrap at $227/mt CFR, shredded scrap at $232/mt CFR and bonus/P&S scrap at $237/mt CFR from the US East coast. A separate East Coast deal was reported for 40,000 mt cargo of HMS I/II 80:20 at $228/mt CFR and shredded scrap at $233/mt CFR.
These most recent transactions reflect a $2/mt reduction relative to the previous East Coast transactions at $229/mt CFR for HMS I/II 80:20, $234/mt CFR for shredded scrap and $239/mt CFR for bonus scrap. Market participants inform SteelOrbis that Turkish mills were running silent on deals made, presumably hoping to prevent an unwanted price increase given their resurgence in demand both ex-EU and ex-US. As a result, short-term pricing had been difficult to forecast throughout August.
The slight downward pricing trend is consistent with the recent decline in Turkish rebar pricing. Sources inform SteelOrbis that rising billet prices acted as buoy, thus preventing deal prices from sinking lower. On Aug. 26th billet offers to Turkey ranged from $335 to $380/mt CFR. Current billet offers to the export market are in the $355–365/mt range FOB China and $320 -335/mt FOB Black Sea.
Turkey’s demand for scrap is expected to continue in the near term, producing additional deals ex-US, although ex-EU deals remain highly competitive. This should help to reduce excess inventory levels on the US East Coast, sources report. In terms of pricing, market participants predict that a resurgent billet market will likely benefit the U.S. scrap market. Despite relatively weak domestic demand, short term pricing should be sustained with the potential for a slight increase by October or November.
On the West Coast, a South Korean mill purchased 25,000 mt of HMS 1 at $235/mt last week, an increase of $12/mt relative to an early August deal. West Coast bulk prices are being supported by rising Chinese billet prices. The Taiwanese containerized pricing rally is not expected to persist. However, market sources inform SteelOrbis of strong demand from Mexico, Peru, Bangladesh and Pakistan. As a result, scrap suppliers are increasing buy prices so as to increase intake activities during a period of relatively limited supply. This factor may initiate an upward pricing trend into Q4 2016.