European scrap prices have continued to increase in a second deal this week. While some market players are not strictly convinced this trend will be sustained, others are expecting higher levels.
SteelOrbis has learned that an ex-Netherlands deal has been done by an Iskenderun-based producer with HMS I/II 80:20 scrap at $356/mt CFR and bonus grade scrap at $381/mt CFR. This deal means that benchmark scrap prices have moved up another $4/mt. The total tonnage in the cargo is believed to be 30,000 mt, while it will be shipped in September. Meanwhile, the gap between benchmark HMS I/II 80:20 scrap and bonus grade is again $25/mt as it was in the previous ex-EU cargo disclosed earlier this week.
While scrap prices are moving up and the sellers’ side is fairly sure that this is just a beginning, not all agree. A source at one Turkish mill commented, “Local demand is seriously low in Turkey. Given Turkey’s decision to tighten its credit flow, the domestic steel sales volume is significantly lower than in previous periods and current production volumes. The only option Turkey had was exports and for that scrap should have declined to $315-325/mt CFR. We were close to achieving that, but now there is an effort towards an artificial price increase. Although this is supported by a few alternative countries, particularly India, Turkey has no opportunity to reflect these price increases in sales, and instead mills are forced to cut their prices.” Another Turkish mill spoke similarly, adding “It is impossible to sustain production when raw material prices are rising with steel quotations falling.” On the other hand, suppliers are fairly confident in themselves, saying deep sea scrap prices are moving up to the $370s/mt CFR. A European scrap seller said, “Collection flow is still not recovering because everyone is evaluating their costs and consider the current levels not workable. With the demand coming out of Indian sub-continent, Turkish mills that are reluctant to pay higher levels should reconsider their positions.” A German sub-collector also reported that the initially anticipated price drop in the local market has not happened.
The short sea segment has been silent this week. Monitoring the deep sea scrap prices closely, short sea scrap suppliers are unwilling to share offers with Turkish mills, but are instead waiting for next week. Currently, SteelOrbis’ reference prices for short sea HMS I/II 80:20 scrap are in the range of $315-320/mt CFR.