Global scrap prices are seen to be maintaining their upward movement in the latest deals, having begun to move up in February after making a downward start to the current year. Despite slackening compared to February, demand for import scrap in Turkey - the world’s biggest scrap importer - continues to be observed, while import scrap quotations have regained the levels recorded at the beginning of 2018. In the most recent transactions concluded in Turkey, European HMS I/II 75:25 scrap has been purchased at $367.5/mt CFR, while ex-St. Petersburg HMS I/II 80:20 scrap has been bought at $371/mt CFR.
US President Donald Trump last week announced that he will impose 25 percent duty on all imported steel products following the Section 232 recommendations made by the US Department of Commerce (US DOC). He has since stated that he will not back down from his decision, while he is expected to officially approve the new 25 percent tariff in the current week. The primary purpose of the Section 232 probe is to reduce imports and to increase US steel mills' outputs, and so with the anticipated rising production rates in the US, scrap export volumes from the country would be expected to fall. As US buyers continue to consider Turkish finished steel prices to be attractive even after the announcement of the tariff in question, the risk of cancelation of the sales concluded by Turkish mills to the US in recent weeks has disappeared and it is heard that the loading of the cargos will be proceeded with. Although Turkish steelmakers are not happy with the duty rate announced within the scope of the Section 232 probe, there were more severe recommendations made by the DOC, and so Turkish producers think that the decision to impose a 25 percent tariff on all import steel products constitutes an opportunity for them since it leaves the door half-open for Turkish mills to continue their finished sales to the US. On the other hand, Turkish steel producers believe this decision to impose an import tariff will push up domestic raw material and steel prices in the US and, as a result, will provide support for prices in the global market.
Domestic scrap purchase prices in the US have mostly moved up in the March buy-cycle, while US suppliers’ price ideas for HMS I/II 80:20 scrap sales to Turkey are now at around $380/mt CFR, as SteelOrbis has been informed. Meanwhile, suppliers in the Baltic region are offering the same grade to Turkey at $375/mt CFR and European HMS I/II 75:25 scrap offers to the same destination are at $370/mt CFR. Additionally, short sea HMS I/II 90:10 scrap offers to Turkey are at $360/mt CFR, while short sea HMS I/II 80:20 scrap offers to the same destination are in the range of $355-360/mt CFR.
It is also observed that countries such as Taiwan and South Korea have continued to increase their import scrap purchase prices. Although the Chinese steel market has made a downward start to the current week, market sources believe the Chinese domestic demand which has been postponed almost since the beginning of 2018 will recover at any moment and that steel prices in China will increase accordingly.