The long-continuing iron ore price negotiations between Chinese steelmaker Baosteel and Australian miner Rio Tinto finally concluded yesterday with an average increase of 85 percent. For the contract year commencing April 1, 2008, fine ore has been raised by 79.88 percent whereas lump ore has registered an increase of 96.5 percent.
Currently, all eyes have again started to focus on scrap. This extraordinary hike in iron ore prices will push integrated steel mills to use more scrap. It is still not known when this increase - which is foreseen to more rapidly affect the markets which predominantly have integrated mills - will affect the Turkish scrap market. Since the Turkish mills have almost completed their scrap purchases for July and August shipments, they are continuing to stay away from the scrap markets.
As regards last week, again a very limited number of ex-deep sea bookings was concluded. In these bookings, HMS I/II 80:20 scrap was booked at $719-720/mt CIF Turkey, whereas shredded scrap found a buyer at the level of $724-725.5/mt CIF Turkey. In the Turkish market, no ex-continental Europe scrap booking has been heard for a very long time. Meanwhile, in both Europe and the US, there is no tightness on the supply side, in particular as regards cut grade scrap. If the Turkish mills decide to start their purchases at the present juncture, it is expected that first bookings will be made at current price levels due to the excess supply in the market. However, in the event of bookings also being made from other markets and if the excess supply is removed, the uptrend in prices may start again.
Meanwhile, while it is pretty hard to give any definite price as regards ex-Black Sea A3 grade scrap, some sales are heard to have been concluded in the range of $680-690/mt CFR Turkey.