Tranquility still dominates Turkish
scrap market, which remained calm all through April and saw almost no serious bookings except for small quantities of A3 grade Black Sea
scrap.
However, this time the reason for this tranquility is not the expectations of Turkish mills for a price reduction, but that both suppliers and almost all buyers are of the same
opinion that the prices have increased in the market recently and will rise further.
In fact, an upward trend in
scrap markets has been observed since last week. The fact that US local market is quite strong, the rise in Euro/US Dollar exchange rate and the slow decline in offers given by Black Sea
scrap suppliers at lower prices for small quantities convinced Turkish steel producers that the prices would increase. As a matter of fact, these producers delayed their
scrap purchases with the expectation that the prices would decline during April. This has gradually eliminated the possibility of
scrap purchases at lower prices.
Although this kind of expectancies aiming to lower
scrap prices had previously been successful, it may sometimes cause sharp increases after the first bookings. In our
opinion, the reason for the current calmness in the market is that
scrap suppliers in serious extent have withdrawn from the market and delayed their offers. Turkish mills, which are willing to buy
scrap, are not able to find enough number of offers. Main reason for such situation is that the suppliers are concerned about being the first one to conclude any sales, not wanting to be the seller with the lowest price with the expectation that the prices may rise further after the first booking.
SteelOrbis has heard that the latest A3 grade
scrap bookings ex-Black Sea were concluded at around $255/mt CFR Marmara last week. However, later on it has been heard that mills in
Greece concluded A3 grade
scrap booking ex-Black Sea at $262/mt CFR. Moreover, offers at $265/mt CFR level have started to be pronounced.
Apart from the situation in Black Sea, when we consider the strong demand in US market and the appreciation of Euro against US Dollar, which will inevitably affect
scrap prices, we foresee that the aforementioned price levels will not be heard any more soon.
In the short run, the lowest offer levels may be $270/mt CFR Turkish ports for HMS I/II 80:20
scrap ex-US and ex-
Europe, minimum $275/mt CRF Turkish ports for shredded
scrap, $260-265/mt CFR Turkish ports for HMS I/II 60:40
scrap and $260-265/mt CFR Turkish ports for A3 grade
scrap ex-Black Sea.
As we mentioned above, price levels in the first bookings to be concluded in the coming days will be reference to the actual market levels. In case of upward trend in
scrap prices, it is highly possible that no softening will be seen until levels that would be attractive for Black Sea
scrap suppliers are seen and a serious increase in Black Sea
scrap supply is observed.