Given the continuing production activity of the Turkish EAFs, albeit at significantly low operating levels, while at the same time they still delay their scrap purchases, the scrap inventories of the Turkish EAFs have started to send out SOS signals. Though they have been in the market for purchases, the Turkish mills have not concluded ex-deep sea scrap bookings for a long time now as they have been unable to find the desired decreases in scrap offer levels in parallel with the decreases observed in the finished steel markets. So far the Turkish mills have been trying to get by with small tonnage ex-short sea HMS I/II 70:30 scrap bought at the range of $220-225/mt CFR and also with scrap collected from their local market.
Ex-Europe HMS I/II 70:30 scrap offers which were transacted at the level of $218/mt CFR two weeks ago have increased nowadays. Having recently accepted to buy ex-Europe HMS I/II 70:30 scrap at the level of 225$/mt CFR, Turkish mills have not succeeded in finding offers below the level of $230/mt CFR. Offers are now hovering in a price range of $230-235/mt CFR due to the fluctuations seen in the €/$ exchange rate. Also, the increase in freight costs to about $20/mt CFR has affected price levels. Given the dramatic reduction in demand against the background of production cutbacks in the European domestic market and the slowdown observed in the industry, scrap supply in Europe has shrunk by approximately 30 percent as compared to two months ago. Compared to the data for February 2008, this decline is estimated at over 50 percent.
Producers in the Far East and Vietnam have continued their purchases, though activity has hardly been intense. Purchases concluded at the level of $290/mt CFR have prevented the US export market from grinding to an absolute standstill. Ex-US scrap suppliers have still preferred to conclude sales to the Far East, in consideration of the price ideas heard from the Turkish mills. Furthermore, these sales have ruled out any decrease for offers given to Turkish mills.
It is observed that the Turkish mills have recently taken an eager interest in purchasing billet due to the current situation in the scrap markets, especially given the decreases in the billet markets which have been similar to those observed in the finished steel markets.
Meanwhile, it is heard that some Turkish mills have started to conduct overhauling works. Should the anticipated scrap purchases not take place this week nor in the coming week either, then we foresee that further news of overhauling works will be forthcoming from various mills.