The low Turkish demand for US scrap is dampening prices on the East coast. This week’s East coast export market concluded with Turkish mills making deals for HMS I/II 80:20 scrap at $220/mt CFR, shredded scrap at $225/mt CFR and bonus grade scrap at $230/mt CFR. These most recent transactions reflect a $7/mt decrease across all grades relative to the latest public transactions of 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 and a $5/mt decline from rumored private transactions.
According to market sources close to SteelOrbis, this $5-7/mt decline was more than was expected by market participants in September. Export sales to Turkish mills were expected to be robust given the end of summer, which traditionally experiences a dip in mill production, and preparation for fourth quarter increased activity.
Turkish mills are wary of demand for their finished goods both domestically and abroad and are cautiously proceeding with scrap purchases. Additionally, ex-US scrap prices have had a difficult time competing with ex-Europe, Ex-Baltic and ex-Canada prices on recent deals. US export firms were holding firm on scrap prices to Turkish mills through August due to expectations of higher domestic competition for the inventory and increased volume needs from Turkey. The resurgent billet pricing from China was also expected to bolster scrap deals as billet is no longer an attractive alternative.
Market sources close to SteelOrbis report a slight downward shift in market expectations post this week’s trading results. A source close to SteelOrbis said, “exporting scrap firms are trying to push price down $20-25/mt for bulk buys of HMS 80:20 in the New York area and are expressing concerns - to us sellers - that the latest Turkey pricing may the highest that they expect in the next four to six weeks.” HMS 80:20 delivered to customer settled in August at approximately $178-188/mt in the East Coast. Another source noted, though, that while the scrap market may continue to struggle, his scrap firm is also seeing positive demand for container business delivered to the Baltimore port.