With Turkey’s most recent ex-US scrap deal, benchmark HMS I/II 80:20 scrap prices have declined to $355/mt CFR. Demand for scrap in Turkey is on the low side, though suppliers state that there is not much supply ready on hand to be shipped. A pessimistic outlook still prevails in the import scrap market, though most market players believe that scrap prices will not follow a sharp downtrend such as seen in the iron ore segment.
SteelOrbis has learned that an ex-US deal was done by an Izmir-based producer with HMS I/II 80:20 scrap standing at $355/mt CFR. Prior to this deal, the ex-US benchmark scrap price was at $360/mt CFR in a deal.
While Turkish mills are still exerting pressure on scrap prices, there are several indicators that show suppliers may resist significant drops in quotations. Scrap flow is slow to export yards, and particularly in the EU collection prices have not declined ahead of the approaching winter. The slower manufacturing sector has led to lower scrap output. India has bought a lot of scrap over the past weeks, though demand in the Indian subcontinent seems to have slowed down, while market players believe that demand received from the region will not diminish in the short or medium term. One market player stated, “Maybe they will not buy scrap at levels equal to $360-370/mt CFR Turkey, but they will continue to buy at around $340-350/mt CFR Turkey as their local demand is still strong.” Most EU-based suppliers have plans to sell one cargo to Turkey for December shipment and this will provide some support for prices. US suppliers are also not so aggressive in pricing, though some players in the US stated that there is some room for another drop for ex-US HMS I/II 80:20 scrap. The lack of cargoes from the EU and Baltic may narrow the room for a price drop. It is known that Turkish mills are planning further cuts in capacity utilization rates. Turkey’s export markets such as Singapore and Hong Kong are now flooded with materials from the Middle East, where the global energy crisis is not an issue. Also, import billet prices voiced in the Turkish steel market nowadays are exerting pressure on scrap. Some market players believe that the inward processing regime in Turkey may prevent Turkey from buying a lot of billets since the material produced will need to be exported and the export side is very quiet.
The workable levels for short sea HMS I/II 80:20 scrap from Romania and Bulgaria are in the range of $330-335/mt CFR.
