Scrap demand is observed to have lately decreased by a significant margin in the international markets. Demand, which has declined considerably in the US domestic market, has now almost come to a standstill in Turkey and Europe.
Turkish mills are know to be in need of scrap in order to continue their production; however, they have continued to refrain from scrap purchases since demand has shown no recovery and prices have been maintaining their downtrend in the finished steel markets.
In the US domestic market, busheling scrap prices have decreased to the level of $225/lt and shredded scrap prices have fallen to $210/lt, both indicating a drop of approximately $30/lt. Also, export offers have shown a decline on the back of low demand from importing countries. The ex-US HMS I/II 80:20 scrap price, which was at the level of $285/mt CFR when there was intense booking activity in Turkey last month, decreased to the level of $255/mt CFR in the most recent booking concluded last week. In the same cargo last week, a Turkish mill bought shredded scrap at $260/mt CFR and purchased P&S scrap at $265/mt CFR.
Scrap purchasing activity has come to a halt following the significant production cutbacks observed in Europe. It is seen that European suppliers have been trying to find a balance between supply and demand, lowering their prices in order to reduce the amount of collected scrap. HMS I/II 70:30 scrap, which was offered to Turkish mills last week at the level of $235/mt CFR for March shipment, has this week been offered at the level of $223/mt CFR.
Ex-Black Sea A3 scrap offers given from Russia have been standing at around the level of $270/mt CFR; however, this offer level has yet to be accepted in the Turkish market. Meanwhile, ex-Georgia A3 scrap has been offered at quite low tonnages to Turkey at $220/mt CFR.
Although freight costs have recently shown some increase, this has not been reflected in steel prices yet. In the steel sector, which has been experiencing difficult times for some time now, it is obviously seen that the supply and demand equilibrium needs to be built up in order to ensure market stability. In the coming days we will observe how the market players will act to provide the necessary balance.