Scrap prices in Turkey remain above mills’ expectations

Turkish steel producers, who have been delaying their scrap bookings for some time now, are observed to have difficulty in accepting current scrap price levels.
 
In the Turkish market, ex-US scrap prices are still standing at last week's price levels; i.e., at $450/mt CFR for HMS III 80:20 scrap and $455/mt CFR for shredded scrap. Last week, US scrap suppliers concluded large volume transactions to China and South Korea, in which price of HMS I/II 80:20 scrap stood at $480-488/mt CFR. SteelOrbis has also learned that scrap demand is strong in the US domestic market at present. Early last week, scrap prices in Turkey were on a downward trend; however, after US scrap sales to the Far East, prices have switched to a flat trend.
 
On the other hand, although last week ex-Europe HMS I/II 70:30 scrap prices for Turkey were heard at $430/mt CFR, Turkish mills have not booked any tonnages at these price levels. This week, no price adjustment has been heard so far. Besides, the strengthening of the euro against the US dollar rules out any significant price decline.
 
The most precipitate reaction to Turkish mills' suspension of their scrap bookings has come from Ukraine. With Russia following Ukraine, transaction prices for A3 scrap from these countries have declined to $430/mt CFR. However, Turkish mills' price idea for ex-Russia and ex-Ukraine A3 scrap stands at about $425/mt CFR this week.
 
Since it has been quite a while since Turkish mills made their most recent scrap bookings, their scrap inventories have decreased to very low levels. Thus, the Turkish mills are expected to return to the scrap market very soon. However, even if they do recommence their scrap bookings, they will likely limit their scrap transaction volumes due to the tepid demand in the finished steel markets, and this may prevent scrap prices from increasing. Furthermore, given that seasonal factors will increase the scrap supply, it is thought that scrap prices may continue to soften for a while.