Following last week’s firm stance by sellers, Turkey’s import scrap market has recorded an upward movement in the current week. The increase was expected as Turkey has significant need for scrap for November shipment, while freight costs have risen significantly over the past month and the collection prices of scrap exporters are also providing support.
A European scrap supplier concluded a deal to an Iskenderun-based Turkish mill on Friday, October 3, with the HMS I/II 80:20 scrap price at $340/mt CFR. This price for the benchmark scrap grade is $3/mt higher than that seen in the previously confirmed ex-UK/EU booking.
An ex-Scandinavian deal is rumored to have been done by a Black Sea-based Turkish steel producer for HMS I/II 80:20 scrap at $347/mt CFR, though SteelOrbis hears that both buyer and seller deny the deal was actually done. For the grade in question, this price is not considered to be a surprise, and most market players think that $347/mt CFR is workable. Another deal by an Izmir-based mill was concluded from Denmark on Friday, with the HMS I/II 80:20 scrap price at $346/mt CFR. Older deals from the Baltic region have also surfaced today, October 7. One deal from Sweden to a Marmara-based mill for HMS I/II 80:20 scrap was done at $345/mt CFR early last week, while a second booking was made by an Iskenderun-based producer from Estonia at $343/mt CFR. SteelOrbis has revised its ex-Baltic scrap prices to $346-347/mt CFR as of today.
Meanwhile, an ex-US deal by a Marmara-based producer has been closed at $365/mt CFR for bonus and shredded grades. This deal indicates that the benchmark HMS I/II 80:20 scrap price is around $345/mt CFR. However, considering the ex-Baltic transactions, SteelOrbis has increased its ex-US HMS I/II 80:20 scrap price to $348-350/mt CFR, up by $6/mt on average. On the other hand, most market players surveyed by SteelOrbis today believe that the next ex-US scrap deal will be closed at or above $350/mt CFR since US-based scrap suppliers are now insisting on prices above that level.
A question asked in the international scrap markets is why Turkey agrees to increase its import scrap prices when domestic scrap prices are set to decline in supplier regions. As SteelOrbis previously reported, prime grade scrap prices in the local US scrap market are expected to move down by $25/mt during the October buy-cycle, though HMS prices are expected to remain stable. Meanwhile, European scrap producers are trying to cut their domestic scrap purchase prices by €10-20/mt. For the US, the lack of available sea vessels is creating a problem for sellers and increasing their freight costs. Still, after the price cuts expected in the local US market, US-based scrap buyers’ purchase prices are more attractive than the purchase prices coming from export yards. In the EU, even with local steel producers cutting their scrap purchase prices, their levels would be in line with or slightly higher than exporters’ purchase prices. As a result, the declines in the domestic scrap prices in the supplier regions are not foreseen to have any direct impact on scrap exports for now. Also, Turkish mills’ appetite for scrap is still strong since for months they have been keeping their shipment periods short. Turkish mills had slowed down their purchases due to their expectations of a softer price trend over the month of September, while after the IREPAS meeting in Munich they were still asking for lower prices than those mentioned above. As the demand from Turkey has increased, sellers’ resistance to concluding sales has also strengthened. Turkey has concluded deals for approximately 12 deep sea scrap cargoes since Monday last week and market sources agree that it still needs to buy many more cargoes before completing its purchases for November shipment. Also, it is useful to remember that December is a short month due to the long holidays in the second half of the month and the shorter period for doing business usually causes deep sea scrap prices to move up.
