Although two new deep sea scrap deals have been disclosed in Turkey’s import scrap market, the main focus of the market is currently the euro-dollar exchange rate and its possible impact on the development market situation.
SteelOrbis has learned that an Izmir-based Turkish mill has concluded an ex-Baltic scrap deal, with the HMS I/II 80:20 price at $270/mt CFR. The total tonnage of the cargo is 35,000 mt, while it will be shipped in September.
The second ex-Baltic booking was made by a Marmara-based producer, and was also concluded at slightly lower than $270/mt CFR Turkey for HMS I/II 80:20 scrap. In the previous deal from the Baltic region, the benchmark HMS I/II 80:20 scrap price was at $266.5/mt CFR Turkey.
However, as stated, the main topic in Turkey’s import scrap market is currently the increasing strength of the euro against the dollar. The increases recorded over past weeks have caused the euro to reach 1.17 against the dollar, while some market players think that the euro will become even stronger against the dollar. The appreciation of the euro has caused European suppliers’ scrap collection costs to rise accordingly, adding an estimated further $13/mt in cost considering the strengthening of the euro from 1.12 to the dollar. Taken together with the rises in freight ($8-10/mt), the increase in European sellers’ costs totals approximately $20/mt. This has a huge impact on their FOB prices and margins.
According to market sources, the stronger euro against the dollar will cause all commodity prices to move up and is expected to have an impact also on finished steel quotations, which may also create some space for deep sea scrap quotations to rise in the coming period.
However, US suppliers are sold out for August shipments and are now collecting scrap to fulfill their commitments arising from previous sales. As a result, they are unwilling to increase their collection quotations as they want to maintain their targeted margins. Some sources state that these export sales may be reflected in prices on the East Coast for September shipments, while some report hearing ex-US HMS I/II 80:20 scrap offers at around $280/mt CFR and even above. Market players also draw attention to the fact that domestic industrial production rates in the US are still on the low side.
In Europe, market players recall that August is traditionally the holiday season. Accordingly, collection activities may slow down in August and, with the euro expected to strengthen further, some suppliers may prefer to be cautious when buying or collecting scrap, in order to minimize the risk. Ex-Europe offers are at around $275-278/mt CFR Turkey, while some players report offers at around $280/mt CFR.
The general opinion in the market is that deep sea scrap quotations to Turkey will test $280-285/mt CFR in the coming period, while some even believe offer levels may reach $290/mt CFR. The active market situation in China seems to provide support for the positive mood in Turkey. Ruling out the possibility of a worse second wave of the pandemic, market players believe that some indicators remain positive in the finished steel market for now, though this is not enough to support all the voiced levels and scrap prices will need further support from Turkey’s steel export sales in order to move up in the future. Turkey is expected to buy at least 35-40 deep sea cargoes for September shipment.