Deep sea scrap prices have indicated a sharp fall in the most recent ex-US scrap deal disclosed in Turkey’s import scrap market.
A Marmara-based Turkish mill has concluded the ex-US deal in question for 6,500 mt of HMS I/II 80:20 scrap at $450/mt CFR, 22,000 mt of shredded scrap at $460/mt CFR and 1,500 mt of bonus grade scrap at $460/mt CFR, for late February or early March shipment, SteelOrbis has learned. In the previous deal, ex-US HMS I/II 80:20 scrap was transacted at $482/mt CFR.
A lot of market players are shocked by this new price level and some have commented that there may be a quality or payment issue. However, they also state that the price level exists now and has been accepted by the market, and so the reasons are not that important. Turkish mills are relaxed as regards concluding scrap purchases. One contact from a mill stated that they are receiving offers which are lower than $450/mt CFR for benchmark HMS I/II 80:20 scrap. Many players think more transactions may be heard this week at around $450/mt CFR for prime grade. One source said he considered this level to be “healthy”, adding that his expectations are for a rebound to around $470/mt CFR Turkey within a couple of weeks. A global steelmaker also stated that international scrap prices are expected to remain strong in the medium term. On the other hand, some market players think that this decrease is psychological, while their expectations for the future trend are for a rebound in prices as Turkey still needs scrap for March shipments. Scrap collection in the EU is still slow, Europe-based suppliers state. The effect of Russia’s scrap export duty is yet to be seen. SteelOrbis believes that the determining factors for the future trend of Turkey’s import scrap market will be the strategy followed by scrap sellers, the demand received from third-party countries such as Mexico and Bangladesh, and Turkey’s rebar sales to local and export markets.
The lack of rebar sales has hit Turkey hard. With the latest ex-US scrap deal closed at $450/mt CFR, traders in the local Turkish rebar market state that market players would prefer to wait and see whether there will be any further decrease in scrap quotations. SteelOrbis observes that Turkish mills are actively negotiating for rebar export sales to the Far East, while China is known to have concluded many sales to the region in recent days as it is trying to destock ahead of the Chinese New Year holiday which starts on February 12. In addition, there is weaker demand in China’s local longs and flats markets because of the offseason, while the spread of the Covid-19 virus in northern China is negatively influencing demand. As a result, Chinese exporters are interested in selling abroad, redirecting some volumes for export. Also, a global steelmaker has stated that, if deep sea scrap quotations decrease further to around $420/mt CFR, China may return to the international scrap market and become a big importer.
