Having remained silent until today, April 4, Turkey has bought an ex-US scrap cargo at a lower price level. Most market players think that this is not a start of a downtrend but a small correction amid the resistance observed from Turkish mills, which had been trying to halt the rising price trend before the local elections on March 31.
SteelOrbis has learned that a Marmara-based producer concluded the ex-US deal for HMS I/II 80:20 scrap at $384/mt CFR, with shredded and bonus grade scrap at $404/mt CFR. The cargo will be shipped in April. “Hence, it can be considered as a stressed cargo under the silent conditions in the market. But again, it will also give Turkish mills some leverage against scrap suppliers,” a source commented. Nevertheless, the transaction in question means the actual price for ex-US HMS I/II 80:20 scrap has dropped by $5.5/mt.
“Once again, the question we are asking is what the US-based scrap suppliers will do,” a scrap seller commented. US scrap sellers were aggressive in recent months and exerted downward pressure on the overall market, changing the mood rapidly. Market players currently want to monitor the situation to see whether the US will do the same this month. However, the local US scrap market is expected to move sideways when purchases for the April buy-cycle start. Sources told SteelOrbis that US-based mills will likely need to buy more scrap in April than in March due to increased steel orders, and overall mill demand appears to be in balance with inbound scrap flows. Sources also said April prices in the US would hinge on domestic HRC prices and lead times, noting that until the bottom has been reached for HRC spot prices, scrap prices would remain vulnerable. “At worst, we expect a soft sideways movement in the US. This limits the ability to cut prices for US scrap sellers,” a source from the region said. Meanwhile, European scrap collection prices remain firm. A Netherlands-based export yard has accepted to pay €317/mt DAP for scrap while collecting, while higher levels are currently receiving resistance from yards. A Germany-based scrap sub-collector mentioned they have failed to gain acceptance for $320/mt DAP so far, and are considering lowering their inventory levels a little to ease some of the pressure coming from inventory costs. A European scrap exporter said today that they are not expecting a downward trend due to the deal mentioned above, “We think deep sea scrap prices can remain in the range of $378-385/mt CFR and this will be the bottom in the worst-case scenario.” It is important to recall that, against the slow performance observed on the long steel side, the flat steel market in the EU is expected to hit the bottom if it has not done so already. Many suppliers have started to claim that domestic HRC prices have already reached the bottom or “will rock it very soon”. Some market players believe the activity in Turkey’s deep sea scrap segment may recover after the Eid holiday and that finished steel sales will also recover. Turkey will mostly be out of the market in the coming week due to the holiday. But this does not mean there will not be no activity since Turkish mills never really stop fully in terms of scrap purchases during holidays. This time though, some producers are expected to cut production shifts or do planned maintenance works. The Turkish longs market seems quiet ahead of the Eid holiday both for exports and domestic sales. Ex-Turkey rebar prices still vary at $590-600/mt FOB for April shipment. In the local Turkish rebar market, most Marmara and Izmir region-based mills are still offering rebar at $600-625/mt ex-works. Most buyers are postponing new purchases, watching financial and economic developments after the recent local elections. Also, there has been active talk about the sale of a large volume of Indonesian billet at $522-523/mt CFR to Turkey, which is equivalent to $487-488/mt FOB, excluding freight.
Meanwhile, there are rumors of ex-Romania scrap deals in the range of $365-369/mt CFR Turkey, $4.5/mt higher than the previous level at $362.5/mt CFR.