European scrap prices in Turkey have surged significantly in two new deals. The aim of European scrap suppliers was $410/mt CFR and above as reported by SteelOrbis yesterday, January 26, but the prices are now higher than those targeted levels.
SteelOrbis has learned that an ex-Netherlands deal has been closed by a Marmara-based mill for HMS I/II 80:20 scrap at $414/mt CFR and shredded scrap at $434/mt CFR, for February shipment.
Another booking was done by an Iskenderun-based producer late yesterday, January 26. The cargo consists of 12,000 mt of HMS I/II 80:20 scrap at $410/mt CFR, 3,000 mt of shredded scrap at $430/mt CFR and 1,000 mt of bonus grade scrap at $430/mt CFR, for February shipment. Before these deals, ex-EU HMS I/II 80:20 scrap was bought at $407/mt CFR, as reported earlier this week.
While European scrap prices have moved up at a fast pace, market players now think that deep sea quotations will increase further in the coming week. “I think we can see $420s/mt CFR for European scrap,” a supplier commented. The surge in the EU region will also push up US suppliers’ offers. Considering the narrow range between the US and the EU in the recent deals, the first threshold for ex-US HMS I/II 80:20 scrap is now expected to be around $425/mt CFR and above. As a result, ex-Baltic scrap is estimated to be in-between. European sub-collectors report that flow to export yards is still on the low side due to the general expectation of a rise in prices. “Export yards are paying €345-350/mt DAP Amsterdam, but failing to find everything they seek,” a German sub-collector reported. A major European scrap supplier said, “While demand coming out of Turkey was not strong, we have seen how resilient scrap prices were. This was due to supply dynamics which will continue to be the main fundamental in the coming weeks. We expect prices to hit $420/mt CFR and breach that level.” As SteelOrbis mentioned before, European mills’ demand for scrap is also expected to increase in February, supported by rising flat steel quotations. The supplier agreed, adding, “Europe will be more active in February in terms of scrap demand.” Meanwhile, the IMF has approved a 46-month $3 billion fund, and the International Islamic Trade Finance Corp. has signed a $1.5 billion financing agreement for Egypt. The country, which was out of the scrap market for some time, is expected to resume import scrap procurement. Another important factor is that sentiment about China’s return is still good. SteelOrbis believes that prices in China are expected to increase, though the pace of the uptrend is yet to be seen.
Accordingly, SteelOrbis’ estimations for short sea HMS I/II 80:20 scrap from Romania and Bulgaria have risen to $390-395/mt CFR, despite the lack of any new deals. The first round of deals from this segment may be closed higher than these levels, as short sea scrap sellers are monitoring the deep sea segment closely.
Additionally, discounts announced for electricity and natural gas prices used by Turkish industry are considered to be a positive development. The Energy Market Regulatory Authority in Turkey announced yesterday that it expects a 12 percent decrease in electricity prices for industries. Also, today, BOTAS Petroleum Pipeline Corporation announced a 13.30-17.22 percent cut in natural gas prices for industrial usage. Turkish mills are still evaluating the impact on their costs, though some players said their costs should decline by $14-20/mt. At a press conference held yesterday by the Turkish Steel Exporters’ Association (ÇİB), the main discussion topic was the impact of electricity costs and global developments on the production and exports of the Turkish steel industry. Adnan Aslan, chairman of the ÇİB, stated that, amid the expectation of a decline in inflation, the expected increase in global steel demand, energy and energy efficiency investments, he expects the global steel industry to begin recovering in the second half of this year and the Turkish steel industry to regain its competitiveness in the export markets.