US export scrap pricing is believed to remain steady

Friday, 01 July 2016 16:20:24 (GMT+3)   |   Istanbul
       

The most recent US export scrap cargos to Turkey were booked at $219/mt for HMS I/II 80:20 scrap, at $224/mt CFR for shredded scrap, and at $229/mt CFR for bonus scrap, which reflect a consistent decline of $16/mt CRF for each scrap line compared to the last US scrap cargo booked the second week in June.  This week saw resurgence in import scrap purchases by Turkey Ex-UK, ex-US and Ex-EU at declining prices compared to the transactions in early June.  The most recent ex-UK and ex-Baltic cargoes for HMS I/II 80:20 were transacted this week and were concluded at $215-$218/mt CFR. 

Turkish steel producers do not believe that import billet prices are providing a cost advantage compared to import scrap.  As a result, they are expected to continue with import scrap deals in July after the Ramadan holiday, which runs from July 4 to July 9. 

According to several traders, US export scrap prices to Turkey are thought to have reached equilibrium and are not expected to drop further through July. Several sources close to the market believe that while the remaining summer period may trend sideways an upswing in scrap pricing is forthcoming for late August and September deliveries.

The potential for the upswing in pricing beyond seasonality, which usually sees a drop in demand through the summer months, is expected due to changes in Chinese tax enforcement, rising trend in iron ore pricing, efforts of ex-CIS billet suppliers to increase pricing to Turkish mills despite weak demand, ex-China billet list price increases, and the fact that new pricing offers from the Black Sea region are already above $215/mt CFR.

Additionally, in the short term, sources close to Steel Orbis have confirmed that although East coast scrap inventories are good, the lower buying price for scrap from collectors may restrict flow into yards.  Therefore, several sources close to Steel Orbis expect late August and September to see a need for restocking scrap as the inventories at yards are expected to lower in the next six weeks.


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