Scrap markets turning strong

In our last raw material market analysis dated March 10, we reported the situation in scrap markets last week and we indicated that the market trend was upward and scrap buyers could have faced troublous days. Scrap markets have started the week with price increases. One of the major reasons for this increase is indicated as the declining stocks in the Black Sea region, as well as in both the US and Europe. There is reportedly a serious tightness in supply of HMS I/II 80:20 scrap ex-Europe and ex-US, commonly known as deep sea scrap. Actually, in the offers given to Turkish mills this week, the price of HMS I/II 80:20 has even reached above $250/mt CFR Turkish ports level. Uncertainty still dominates Black Sea scrap market. We mentioned in our previous analyses that heavy winter conditions coupled with the recent regulation had created a disadvantageous position for Black Sea scrap suppliers. These factors significantly increased the cost of scrap collection in Black Sea. Since scrap collection has slowed down due to increased costs and winter conditions, scrap stocks that are available for export from Black Sea has reportedly decreased to very low levels. As of today, Black Sea scrap suppliers, who have already limited scrap stocks, prefer remaining calm, rather than giving offers to the market, where there is uncertainty. Even if they have to give offers, their offers will reportedly be not below $255/mt CFR Turkish ports level for A3 grade scrap. The rise in US Dollar is another issue that worries Turkish mills. The factor, which will further trigger all these negative circumstances, causing a sharp increase, will be the fact that stock levels of Turkish mills, which have not been very active for the last two weeks, will come close to critical levels. In the market, where offer collection, evaluation and negotiations are currently seen, we think that new bookings will start to be heard as of tomorrow.