Negative sentiment persists in Turkey’s import scrap market as new deals and rumors have been heard today, August 20. The focus of the market is still on the impact of the large volumes of billet imports and the cheap price levels coming from China. Market players are trying to guess when China will recover and how the billet cargoes to be shipped to Turkey will impact Turkey’s scrap needs.
SteelOrbis heard that an Izmir-based producer has signed a contract with a Canadian scrap supplier for HMS I/II 95:5 scrap at $373/mt CFR and shredded scrap at $383/mt CFR, according to which ex-Canada HMS I/II 80:20 scrap stands at around $363-365/mt CFR. While Canadian scrap prices are usually considered similar to ex-US scrap prices, this time it is observed that US-based scrap suppliers are inclined to keep their offers above $370/mt CFR. However, the Canadian seller is known for its habit of offering several cargoes to Turkey within a short period of time and tends to lower its price in each successive deal. SteelOrbis hears there is one more cargo from Canada that is seeking a buyer at present. In this context, SteelOrbis has revised its ex-US scrap price to $367-370/mt CFR for now, down $4/mt on average.
There is a rumor of an ex-Denmark deal done by a Black Sea-based Turkish producer for HMS I/II 80:20 scrap at $367/mt CFR. This information has not been confirmed by the buyer or the seller by the time of publication, though some market sources claimed this was a top-up for a previous contract. Amid the ongoing downward pressure on deep sea scrap prices, SteelOrbis has revised ex-Baltic HMS I/II 80:20 scrap prices to $365-367/mt CFR, down $3/mt on average.
Several market sources said that they are waiting to see the response of US-based suppliers to this new ex-Canada deal. Most players surveyed by SteelOrbis mentioned it is unlikely that US suppliers will follow suit. One market player pointed to the US scrap deals done to Peru and Mexico at more attractive price levels as compared to those done to Turkey. “Most European or US suppliers would like to focus on other opportunities in alternative markets such as Mexico, Peru and Egypt. Not everyone can accept losses and work with Turkish mills,” the source added. Collection prices in the EU are in the range of €295-305/mt DAP. “I heard €295/mt DAP in Amsterdam has been accepted by sub-collectors this week, though the tonnage is very small,” a European scrap seller said. Meanwhile, another seller said that scrap flow at €295/mt DAP in Europe is very slow, while in Poland collection prices are at around €300/mt DAP for HMS I/II 80:20 scrap. Some European scrap suppliers report that their collection costs will not allow them to sell to Turkey if they want to profit from transactions. “The previous sales that we heard must have been done with some losses,” a European seller commented. A couple of sellers report that they are not in the market, having taken a step back to observe the downward price trend, believing the bottom is close. “There may be an upward correction after hitting $360/mt CFR Turkey,” a source said today, while another source said that Turkish mills may show more interest in scrap at the current price levels. SteelOrbis has revised its ex-EU HMS I/II 80:20 scrap prices down by $3/mt to $360-364.5/mt CFR.
The short sea market has also moved down. After the deals closed in the range of $350-355/mt CFR, buyers’ bids now for ex-Bulgaria and ex-Romania cargoes are at around $350/mt CFR.
As SteelOrbis reported today, Chinese billet export prices have shown some signs of bottoming up since, after falling as low as $420-425/mt FOB on Monday, offers have inched up today. However, market sources in the scrap segment say that the arrival time of the current orders will continue impacting the scrap market during the fourth quarter. “Most of the billets that are ordered this month will arrive at the end of October. So, the scrap demand in the October-December period is also under question,” a source said. Another one source said that China’s volatile pricing policy is unlikely to disappear within days.