Global scrap trade has nearly halted due to the suspension of scrap bookings by Turkey, the world's largest scrap importer, and also due to the lunar New Year holiday in China, the world's second largest scrap importer. Such weak demand has contributed to an unavoidable decline in scrap prices.
A number of market players in the US indicate that, following a decrease of approx. $25/mt in US domestic scrap prices in early February, scrap prices may show a further slight softening during the rest of February if demand fails to recover. While no specific ex-US scrap offers for Turkey have been heard so far, SteelOrbis has been informed that ex-US HMS I/II 80:20 scrap prices for Turkey may stand below the level of $480/mt CFR.
On the other hand, in the European domestic market scrap prices have also decreased. Spanish steel producers have suspended their scrap bookings in line with the downward corrections in scrap prices, and have started to monitor Turkish steelmakers, waiting for the price level at which Turkish mills will begin their purchases. The latest ex-Europe scrap offer to Turkey has been at $457/mt CFR for HMS I/II 70:30.
In the Black Sea region, scrap collection costs have decreased in the past week, reacting rapidly to the declines in scrap prices. SteelOrbis has heard that some low volume ex-Black Sea A3 scrap bookings to Turkey have been concluded at approximately $450/mt CFR.
Since Turkish steel mills are not active in the scrap market, scrap suppliers are not giving offers either. Many scrap suppliers are reported to have previously built up their scrap inventories; however, these suppliers are waiting for Turkish steel producers to resume their scrap bookings and so they are not giving any offers for the time being. This situation prevents the emergence of a new scrap price level. On the other hand, the political turmoil in the Middle East, as well as weak demand both in the domestic and export markets, makes it difficult for Turkish steel mills to adjust their scrap purchase prices. SteelOrbis has learned from market sources that Turkish steel producers may continue their scrap purchases at minimum volumes and even may cut their output levels for a while, until the finished steel market gains some clarity.