Prices in the Turkish scrap market, which had been continuing on their downtrend for a long time, in the past week decreased further to the price level of $130/mt CFR Turkey. However, upon Turkish producers' reaction to the above price level, a sudden upward movement was triggered in scrap prices. In our view, the conclusion of a certain volume of sales in late October by the Turkish producers - who have been going through a troubled period as regards billet and finished steel sales - played a strong contributing part in the abovementioned reaction and as such cannot be ignored.
Last week, a succession of scrap deals concluded by a Turkish producer had a resounding impact on the market. The purchase activity in question started with HMS I/II 80:20 grade material (this product had decreased to the level of $130/mt CFR Turkey at the time); subsequently, following a series of purchases from the US, UK and Europe in the price range of $130-150/mt CFR Turkey, the number of ex-deep sea scrap cargoes purchased by the producer in question alone reached as high as seven. In the wake of this producer's buying activity, other producers concluded ex-deep sea scrap deals at price levels of $140-150/mt CFR Turkey in the past week. Consequently, it is observed that this week the price levels of scrap offers have risen. It is heard that a lot of Turkish producers are still in the market seeking to buy scrap, with the price levels of ex-deep sea HMS I/II 80:20 grade scrap offers currently in the range of $160-170/mt CFR Turkey. Meanwhile, ex-Black Sea A3 grade scrap offers have been varying in the range of $180-220/mt CFR Turkey. While the ex-Romania or ex-Ukraine scrap offers have been at the lower end of the abovementioned range, ex-Russia A3 grade scrap offers may be found approaching the level of $220/mt CFR Turkey.
As we mentioned in our scrap analysis last week, the market has been influenced by fluctuations in the euro/US dollar exchange rate and also by the approach of the winter season. In addition, the scrap purchases by Turkish producers in particular are likely to have a determining impact on the trends in the markets in the current period.
Both suppliers and buyers of scrap are still experiencing difficult times. It should not be forgotten that the scrap suppliers (who had not concluded business over a long period and who have been concluding sales only by accepting a certain loss margin) may find it difficult to accept the low prices once their high stock levels gain relief; and may also consider a resumption of their scrap collection activities. On the other hand, it also should not be forgotten that the producers may again think about rolling back their production outputs if their finished steel product prices (that will built up according to scrap costs) are not accepted by the market.