Due to the continuing negative sentiment in Turkey’s import scrap market, another significant decline was seen in deep sea scrap prices late last Friday, April 18.
SteelOrbis has learned that an ex-US booking was done by a Marmara-based Turkish steel producer with the HMS I/II 80.20 scrap price at $331.5/mt CFR. This level was $16.5/ mt lower than the previous price. The fall in price came a shock to the market when disclosed, showing US-based suppliers are now willing to accept sharp cuts in prices. Downward expectations regarding the May buy-cycle in the local US scrap market are believed to have contributed to their decision to cut their export prices. SteelOrbis has learned that scrap flow to US-based export yards is still relatively good as the domestic market is expected to decline further in May after the reduction already recorded in April.
Meanwhile, two ex-EU scrap deals from Wednesday last week were also disclosed on Friday. An ex-Netherlands cargo was bought by an Iskenderun-based producer with HMS I/II 80.20 scrap at $330/mt CFR, while an ex-Germany booking was done by an Izmir-based mill at $333/mt CFR for the same grade. The absence of the usual gap between ex-US and ex-EU prices indicates that prices are being determined by the wishes of buyers.
Following the ex-US transaction, Europe is not expected to achieve the abovementioned levels again. Based on the traditional $5/mt gap between ex-US and ex-EU scrap, SteelOrbis' reference prices for ex-EU HMS I/II 80.20 scrap has been revised to $325-326/mt CFR.
With the new week starting, the impact of these deals is yet to be seen. Market sources believe that a bottom may be reached this week, if Turkish mills step up their deep sea scrap purchases. "Producers are in need of scrap. This price level is now attractive and almost in balance with billet quotations. We anticipate an acceleration in trading this week or mills will have to announce some cuts in capacity utilization rates," a European scrap supplier commented.