Following Turkish mills' return to the deep sea scrap market with new inquiries, prices have recovered sharply, with the price movement viewed as a “correction of the recent downward correction.”
A Marmara-based steel producer concluded a deal from the US yesterday, June 21, with HMS I/II 80:20 scrap at $375/mt CFR, and shredded and PNS grade scrap standing at $395/mt CFR. The seller of this cargo had been waiting a long time to achieve a price above $370/mt CFR and said it was impossible to sign a contract below this level from the US East Coast. Additionally, an Iskenderun-based producer has concluded another ex-US booking with HMS I/II 80:20 scrap at $375/mt CFR, today, July 22. Consequently, SteelOrbis' reference price for ex-US scrap has increased by $6/mt week on week, moving deep sea scrap prices closer to SteelOrbis' initial estimations made earlier this month in the scrap forecaster for July.
Meanwhile, a buyer in Turkey's İskenderun region has concluded an ex-Belgium deal with the average price standing at $374/mt CFR. The HMS I/II 80:20 scrap price in the cargo stands at $368.5/mt CFR, SteelOrbis learned. Reference prices for ex-UK/EU scrap have moved up by $7/mt after this deal.
There are rumors of older deals from last week. Reportedly, an ex-Riga booking done by another Iskenderun-based producer was closed at $365/mt CFR, while the same producer bought an ex-UK cargo with HMS I/II 75:25 scrap at $355/mt CFR. These two deals have not been confirmed or denied by the parties involved, but the prices are no longer indicative for deep sea scrap prices since the deals are older.
With Turkey's interest in scrap accelerating for August shipment, only one producer has completed its scrap purchases for this term. Some European scrap suppliers have already sold their cargoes for August shipment and they are expected to enter the market with new offers for September shipment. The renewed war between the US and Iran is causing sea freight rates to rise again, sources report. For example, ex-US East Coast freight rate has gained $5/mt over the past week. The situation is similar in the EU and the Baltic. Oil prices have climbed above $95/barrel for the first time in nearly six weeks, as the US and Iran have downplayed the likelihood of renewed negotiations, while ongoing disruptions to global supplies have continued to intensify.
As the risks of another full-blown military conflict in the region returns, Turkish rebar traders are reporting that they believe the bottom has been reached in the local rebar market. A recovery in activity has been seen in the local rebar market this week, though the margins of Turkish mills remain tight. Traders' inventory levels are on the low side and the demand observed is not the result of a revival at construction sites. Turkish steelmaker Kardemir opened its domestic rebar sales earlier today, July 22, at TRY 27,295/mt ($578/mt), excluding VAT, up by TRY 795/mt ($12/mt) as compared to July 7, amid ongoing currency fluctuations and costlier energy expectations. It closed its sales within less than an hour after selling around 32,000 mt with its favorable payment terms. Turkish mills have not announced any meaningful plan to cut their capacity utilization for now, and so they are expected to continue their deep sea scrap purchases in the coming days.
As for the supplier regions, the EU is now on its summer holidays. European mills have mentioned their plans to exit the market for longer than usual amid the lack of steel demand, while the regional scrap market has moved down by €20-30/mt this month. European exporters were bidding €270-275/mt DAP before the holidays and this price was not considered to be profitable by sub-collectors. On the US side, as SteelOrbis mentioned yesterday, US East Coast ferrous scrap prices to the docks remained unchanged on Tuesday after declining for four consecutive weeks. The price of HMS I in New York has trended sideways at $250-260/gt delivered to export yard. Boston dock prices fell late last week as they caught up with declines seen in New York and Philadelphia. HMS I fell by $10-15/gt to $230-240/gt delivered to Boston export yard.
As a footnote, the Central Bank of the Republic of Turkey will announce its interest rate decision tomorrow, with the general consensus being that rates will remain unchanged.
