With Turkey buying a cargo from the Baltic region, the psychological threshold of $500/mt CFR has once again been broken.
SteelOrbis has learned that a steelmaker in Turkey’s Iskenderun region has concluded the ex-Poland deal for 32,000 mt of HMS I/II 80:20 scrap at $502/mt CFR and 3,000 mt of bonus grade scrap at $522/mt CFR, for December shipments. Prior to this booking, SteelOrbis’ ex-Baltic scrap prices were at $490-495/mt CFR.
Despite the surge observed in prices in the transaction in question, some players state that Turkey’s import scrap market is not really ready for these levels. More than two sources stated that some Baltic-based scrap sellers are buying scrap from the EU, resulting in higher copper rates in composition of scrap, which are not acceptable, particularly to Turkish flat steel producers. Therefore, cargoes with suitable copper content are achieving higher prices. On the other hand, there is a good amount of offers to Turkey from the deep sea segment, and the number of buyers is also decent. One market player stated that this ex-Poland deal may remain an exception before all Baltic cargoes reach this level. “One may easily find a cargo at around $495-496/mt CFR before the week ends,” the source added.
On the other hand, some market players stated that US-based scrap suppliers were asking for $505-510/mt CFR Turkey before the Polish cargo, though there has been no deal done from this source since October 14.
In Europe, the collection price voiced by one market player is €360-370/mt. “Since the lower end fails to attract collectors, this range signals for breakeven at $485/mt CFR Turkey if we accept freight to be at $45/mt,” the source stated. A major European scrap seller also stated that it is receiving demand even from buyers they have not heard from for years. “The Southeast Asian market is facing with tight supply amid the high levels of Japanese scrap quotations,” commented the seller, adding, “Also, carbon emissions are increasing scrap usage, for example POSCO’s scrap usage is around in the low 20s percent right now versus 12-13 percent in the past and even in the period when iron ore prices fell, their scrap usage had not faltered.”
Having said all the above, many believe that the deal in question will cause confusion amongst Turkish mills. “Despite the lack of exports, Turkish mills are not voicing planned cuts in their capacity utilization rates and their order books are fairly full for November and December. With the anticipated traditional increase in deep sea scrap prices in the winter season, this may be the beginning of a second wave, though one shall calculate the risks,” another source explained.
As December shipments continue, Turkey needs around 4-5 cargoes for November shipments and at least 30 more for December. As scrap collection will slow down in December which is already a short month in terms of trading, some say there may be a supply problem.
Meanwhile, short sea scrap prices from Romania and the Adriatic for HMS I/II 80:20 are now in the range of $475-480/mt CFR Turkey. Following the deal done by an Iskenderun-based producer on Friday last week at $455/mt CIF for ex-Israel HMS I/II 75:25 scrap, the new offers are in around the $470s/mt CIF. Mostly the silence on the short sea side is continuing as well as the anticipation of a further increase in actual prices.