US East coast export scrap prices to Turkish steel producers have ticked down another notch since our last report two weeks ago and some within the US scrap market are concerned that prices could continue to wobble.
The most recent ex-US cargo of HMS I/II 80:20 to Turkish mills took place this week, concluded at $180/mt CFR, which reflects an approximately $5.75/mt CFR decline from a prior booking that took place on Jan. 15.
Sources close to SteelOrbis say that while they are hopeful that this new price will be a “structural bottom,” they are equally hopeful that export scrap transaction prices will not erode further, since selling scrap at a lower price to Turkish mills continues to pose a greater price advantage over selling scrap into the US Pittsburgh / Cleveland and Midwest due to prohibitive freight cost.
“Turkish mills’ desired prices may not be attractive but selling export is still a better deal than selling domestic because you’ll need to pay freight costs to move scrap inland,” one source said. “Unless something crazy happens in the domestic market and prices jump up substantially in February, which no one expects will happen, there is no cost advantage to selling domestically.”
Selling export cargos of HMS I/II 80:20 below $190/mt CFR, however, does have margins trending tight.
“Basically, what happened this week, is that although the exporters have been trying to say they couldn’t sell below $190/mt CFR, someone finally blinked,” one East coast export source said. “Inflow into the yards has been challenged and the recent blizzard certainly didn’t help anything, especially since construction and demo essentially stops until things thaw out. We are hopeful that $180/mt CFR is a structural bottom.”