Even though the market situation is not fully clear yet, right at the return from the New Year holidays the general expectation is that scrap prices will rise further in January.
The Turkish scrap markets closed 2009 with very low activity. Last week limited bookings only from Europe were heard. A booking was concluded on the last day of 2009 for HMS I/II 70/30 ex-Europe at $318/mt CFR and for shredded at $325/mt CFR. When compared to the previous bookings, the HMS I/II 70/30 price is observed to have risen by $3/mt.
The expectation that European steel producers will return to the market due to their low inventory levels and also the weakening of the dollar against the euro are the main factors pointing to the possibility of a further increase in ex-Europe scrap prices in Turkey.
Cut grade scrap prices in the US domestic market are expected to move up by at least $40/mt. Some US suppliers state that the expected rise may be even higher, as they believe Turkish producers will focus on scrap purchases in January. While it is almost certain that Turkish producers will be back in the market, Chinese steel producers are not expected to conclude any scrap bookings from the US in January.
Only limited activity is observed as regards A3 grade scrap ex-Black Sea, as the New Year/Christmas holidays are still ongoing in Russia. Scrap collecting price levels in Romania are reported to stand at around $290/mt.
Turkish producers, who had generally delayed their scrap purchases in December, are expected to start buying in January, in line with the decisions they will make on the production side. However, if they keep their production rates at the current levels, they will obviously need to import scrap cargoes.