Turkey has bought two cargoes from the EU and the US at lower price levels, while the mood in Turkey’s import scrap market has changed after the long weekend holiday which started on October 28.
SteelOrbis has learned that a Marmara-based producer has concluded a deal from the UK, with the cargo consisting entirely of HMS I/II 80:20 and the price at $489/mt CFR, for late November shipment. Prior to this deal, the ex-Europe HMS I/II 80:20 scrap price was estimated at $494-495/mt CFR Turkey.
Also another Marmara-based mill has concluded an ex-US booking from Puerto Rico for 12,000 mt of HMS I/II 80:20 scrap at $494/mt CFR and 10,000 mt of shredded scrap at $514/mt CFR. This level is also lower than the price in the previous transaction closed at $502-503/mt CFR from the US.
SteelOrbis sources state that the expectations for the future trend of Turkey’s import scrap market have changed within a short time. The estimations were more positive before the holiday, but, with the negative signals from China as well as the downward trend observed in freight indexes, a deeper downward correction seems possible now. “Those negative signals are creating uncertainties,” one source stated, “so both buyers and sellers are starting to maintain a cautious stance.” Meanwhile, it has also attracted attention that, despite the decreases in freight rates, they are not moving down at the same pace, with a drop of only $2-3/mt mentioned by several sellers. On the other hand, China’s efforts to limit its production have resulted in a sharp decrease in iron ore prices, which are now below $100/mt on the Singapore futures exchange.
Also, the 48 percent price increase for natural gas for industrial usage announced in Turkey yesterday, November 1, has raised further concerns. Higher energy costs mean Turkish mills will need higher margins, while their margins are already around $230-240/mt between rebar and scrap. “This may lead Turkish mills to exert pressure on scrap prices in the coming period, while they try to increase their finished steel quotations, though, without exports, it may also lead to some cuts in utilization rates in the medium term,” a source stated. For now, the downward pressure on deep sea prime scrap prices is limited as availability is also on the lower side. “Winter is approaching and there are holidays in late December and early January. This can help create a supply-demand balance in the scrap market,” another source stated.
As the US and the EU have now reached a solution as regards the Section 232 duties, market intermediates are waiting for a detailed announcement from the parties. While there are no further explanations about the plan, some market players stated that, if Europe manages to sell flat steel to the US in the coming period, this may cause flat steel prices in the US to decrease and, hence, pig iron and prime grade scrap prices may also soften. Having said that, it is too early to make clearer assumptions on this topic which is being monitored closely by all parties at the moment.