With Turkish mills covering a lot of ground regarding their import scrap procurements for February shipments, there is an increasing resistance from the mills against higher offer prices or towards current prices. SteelOrbis believes that Turkish mills have concluded at least 22 deep sea scrap deals and now have enough time to exert some pressure on prices in the remaining deals to be done for shipment in late February and early March. Meanwhile, sellers’ expectations of a firm price trend have not changed given ongoing high collection costs and slow scrap flow to their export yards. Against this backdrop, Turkey’s import scrap market has started to move sideways this week.
SteelOrbis has learned that an ex-Finland cargo was bought by a Marmara-based Turkish steel producer yesterday, January 19, with HMS I/II 80:20 scrap priced at $373/mt CFR. This price is slightly higher compared to the previous ex-Baltic deals done at $372-372.5/mt CFR, but is mainly believed to signal a sideways price movement.
While the above deal has not signalled a decline in deep sea scrap prices, most market players believe that it shows that the upward movement of prices has now stopped. “Now we anticipate Turkish mills will start exerting stronger pressure on European scrap offers. An ex-Scandinavia booking done around at $373/mt CFR means there are only a couple of buyers in the market that are willing to pay this price,” a European scrap seller commented. While the collection prices at EU-based scrap export yards are still in the range of €275-285/mt DAP, some sources report that on rare occasions collection prices have reached €287/mt DAP. “Not many available cargoes should be expected in the coming days from the EU. The euro-dollar exchange rate again hitting the 1.17 level has also changed the sentiment here,” another EU-based scrap dealer mentioned today, January 20. SteelOrbis believes that high collection prices will provide some support to sellers, though it will all depend on sellers’ willingness to wait for buyers to show interest. Turkish mills’ steel sales are on the low side as mentioned before, but lately competition in the local rebar market has resulted in a sharp decline in prices. Turkish mills’ desire to accelerate their rebar sales is disrupting the balance between rebar and scrap prices. If more available deep sea scrap cargoes surface while Turkish mills are waiting for lower scrap prices before continuing their deep sea scrap purchases, the higher availability is expected to cause prices to move down slightly. “This slight slide would just be considered a correction in the end, since supply costs and collection dynamics do not give much room for a sharp decline,” another source told SteelOrbis today.
