Although scrap prices have decreased in line with the expectations stated in our previous analysis, they are still standing at high levels as compared to finished steel and billet prices; thus Turkish mills' scrap purchases have almost come to a standstill. Last week, no deep sea scrap booking was heard. Turkish mills have tried to make do with local scrap purchases as well as with some low tonnage ex-Black Sea scrap purchases.
As of today, March 17, producers' price idea for scrap purchases stands below the level of $200/mt CFR. Following the most recent ex-Europe HMS I/II 70:30 scrap booking concluded at $208/mt CFR, no price offering has been heard in the local market. Although the European domestic market is quite sluggish, the increasing €/$ exchange rate has made it difficult for ex-Europe scrap suppliers to decrease their offers and lower them to levels acceptable to Turkish mills.
The acceptable price level for ex-US HMS I/II 80:20 scrap according to the mills is at $200/mt CFR; however, the mills have not succeeded in finding offers at this level. The recently-transacted price of ex-US HMS I/II 80:20 scrap at $215/mt CFR represents a further softening due to demand slackness and price reductions in the local US market; however, it seems difficult for suppliers to lower their offers below $210/mt CFR for the Turkish market nowadays. Scrap collection activity has considerably slowed down due to the decreasing prices and sluggish markets.
In spite of the significant decrease in ex-Black Sea A3 scrap offers as compared to last week, Russian origin scrap is still at unreachable levels for Turkish mills. The downward trend experienced in the local Russian market has affected their export offers. However, Russian export scrap offers, which have decreased to $230/mt CFR, are still high for the Turkish mills. Following the booking concluded last week at $203/mt CFR, ex-Romania A3 scrap has this week decreased below the level of $200/mt CFR. Moreover, it is also heard that another booking has been concluded at the level of $195/mt CFR.
In the Turkish domestic market, scrap prices have shown further decreases as of today, March 17. Some mills are observed to have even lowered their HMS I prices to TRY 320/mt ($188/mt).
We have entered a critical period both for producers and suppliers. Should scrap supplies fail to record any seasonal increase, which would consequently lead to further declines in scrap prices, then it seems unlikely that scrap purchases needed for steel production will be made.