While Turkish mills have started the new year with a cautious stance due to their slow finished steel sales, the problem of scrap availability seems to be a bigger factor to consider with regard to the upcoming deep sea scrap deals. Both in the US and the EU, scrap suppliers report that scrap flow has been disrupted by bad weather conditions. While US suppliers mention some exporters have needed to increase their collection prices in line with the uptrend observed in their local market, European sub-collectors report that even for them it has been hard to collect scrap since the holidays.
There are rumors in the market about some deals, though most market sources report that they are not new deals. An ex-US West Coast deal to Turkey is reported to have been closed at $371/mt CFR Iskenderun for HMS I/II 80:20 scrap. This deal raised questions, with market sources wondering whether a quick repeat of this price from the West Coast could be possible for Turkish mills. US-based market sources think that it is unlikely that another ex-US West Coast deal will be seen at such a price, especially when freight is rising for Turkey. “This deal was said to be an old one, but not everyone is convinced,” a scrap supplier said today, December 8. The uptrend in the local US scrap market and the slower flow to East Coast-based export yards signal a firm stance on the suppliers’ side. Accordingly, SteelOrbis’ reference prices for this grade have been increased by $2/mt to $371-372/mt CFR.
Meanwhile, an ex-Baltic booking reported to have been done by a Marmara-based producer has been closed for HMS I/II 80:20 scrap at $371/mt CFR, which was denied today by one of the parties reported to have been involved. SteelOrbis has increased its ex-Baltic scrap prices to $368-369/mt CFR for now, considering the upward pressure building in the market.
Lastly, an ex-UK booking by an Iskenderun-based producer has been signed at $362.5/mt CFR, up by $2.5/mt as compared to the previous price range.
“We see that there is a positive vibe among the scrap sellers and there are only a few sporadic offers in the market. Even some took a step back after failing to get bids last week, and now they are aiming for higher levels,” a source at a Turkish mill said. Another source commented that import billet is not attractive or an alternative for Turkish producers for now, “especially after the recent rally observed on China’s side”. A seller said he is expecting prices to move up towards $370/mt CFR for ex-EU scrap and to $375/mt CFR for ex-US deals. Some sellers believe the uptrend may be curbed by the lack of finished steel demand in the local Turkish market, but none of them think there is potential for a softening in the coming month. “There is a significant disruption in scrap flow,” a German-based scrap collector reported, adding, “There is almost no movement to our yards, and now exporters have started to bid €277/mt DAP in Amsterdam to get what they need from us.” Market sources report that the first increase in the local EU scrap market was €10/mt but they expect another €10/mt in the coming period. “Local scrap prices are now lower than exports, hence European mills will also be forced to meet the current price levels if they wish to restock,” another sub-collector mentioned. As a result, despite Turkish mills’ cautious stance in early January, the fundamentals of the scrap market carry more weight right now for the future trend of deep sea scrap prices.