Following an almost three-week silence which was passed with sporadic deep sea scrap deals, Turkey’s import scrap prices have plunged in new deals from the EU. Market sources were debating if this would happen when the week started, but a drop this big was not anticipated. Only a few sources mentioned that a sharp price drop was coming.
When the week started Turkish mills made some inquiries and did not find common ground with sellers. European scrap suppliers were willing to cut their prices to Turkey but most of them were still negotiating for the $394/mt CFR for HMS I/II 80:20 scrap. With the week proceeding, Turkish mills once again voiced their desire to wait until next week, exerting more pressure on deep sea scrap prices. There were rumors of some major mills getting prepared to cut production rates or planning maintenance as their rebar sales were underperforming.
Today, June 12, several European deals surfaced in the market, most of them were done by the same supplier. An ex-Bremen cargo was sold to an Izmir-based producer for HMS I/II 80:20 scrap at $392/mt CFR. Another ex-Hamburg cargo was sold to another Izmir-based mill with HMS I/II 80:20 scrap at $390/mt CFR. A third cargo from the Netherlands was sold to a mill in Turkey’s Iskenderun region with HMS I/II 80:20 scrap at $386/mt CFR. As a result, the ex-UK/EU scrap prices in Turkey declined sharply to $386-392/mt CFR, from the previous $397-400/mt CFR range.
Market sources report that exchange rate helped the drop but does not provide a full explanation for the decline in prices. Some scrap suppliers believe that the market has hit bottom with these deals. Some others think that an ex-US booking would bring clarification after these transactions. Meanwhile, most European sellers SteelOrbis surveyed mentioned that they have no intention of following this drop due to their firm cost structure. Collection costs of European exporters are still at €295/mt DAP, most sources report, with the freight from the EU to Turkey remaining at $33-35/mt. Turkish mills are expected to return to the market in the coming week as this drop will be sufficient for them to start buying deep sea scrap after being out of the market for a long time. Most Turkish producers need to buy at least one deep sea scrap cargo. Market players believe that, depending on mills’ appetite for scrap, deep sea scrap prices may remain firm or even recover slightly.
Amid the lack of deals, SteelOrbis’ reference prices for ex-US and ex-Baltic scrap have been revised downwards to $397-398/mt CFR and $395-400/mt CFR, respectively. Scrap prices in the US domestic market trended sideways in June for all grades as scrap demand remains consistent and flows are adequate. Some buyers commented that there is an overabundance of scrap material in the market, but the steel sector’s robust activity has consumed it at a brisk pace. Contacts expect July to feature a similar trend, as part of the two to four months of stability projected in April. Yet there are market fundamentals and possible federal commercial policy implementations that could help prime grade prices in the summer months.
Additionally, two more cargoes from the EU were transacted but are considered to be short sea bookings. An ex-France deal by an Izmir-based producer was closed for 10,000 mt of HMS I/II 80:20 scrap at $391/mt CFR. Another deal from France indicates that the price is at $388/mt CFR for 20,000 mt, but this deal is very old, sources reported. With the collection prices at Romania’s Constanza port being at $310-320/mt delivered and freight from Romania to Turkey at $35/mt CFR, sources report the recent developments will exert a lot of pressure on Romanian prices. The workable levels of ex-Romania short sea cargoes are down to $372-378/mt CFR today, though further declines are easily possible. Having said that, Romanian sellers have recently been selling HMS I/II 90:10 scrap to Turkey instead of HMS I/II 80:20 scrap. Turkish mills’ complaints about impurity have caused Romanian sellers to reconsider their sales strategy to Turkey.
