With a deal closed yesterday, Turkey’s deep sea purchasing prices have collapsed and declined by almost $20/mt as compared to the previous confirmed booking done from the US. This new deal has pushed benchmark HMS I/II 80:20 scrap prices below the psychological threshold standing at $400/mt CFR Turkey.
SteelOrbis has learned that an Izmir-based producer concluded a deal from the US yesterday, February 27, with 18,000 mt of shredded and 12,000 mt of bonus grade scrap at the average price level of $415/mt CFR. This information indicates that ex-US HMS I/II 80:20 scrap prices have declined to $395/mt CFR, with the premium standing at $20/mt.
The reason behind the collapse is the high number of offers shared with Turkey, almost from all scrap supplier regions. According to sources, current offers in the market total approximately 15 deep sea cargoes. Additionally, negative expectations regarding the local US scrap market for March buying-cycle had a significant impact on Turkish mills targeted prices. SteelOrbis has already reported that domestic US scrap market is expected to decline around $30/mt in March. European sellers were not willing to cut their offers to Turkey below $400/mt before this deal, but now most players believe they will be forced to evaluate the situation once again. Collection quotations in the European scrap market have also moving down, currently standing at around €325-335/mt DAP. Sub-collectors in the EU are expecting more decline in prices during March. Most Turkish mills surveyed by SteelOrbis believe that there is more room for a decline in prices, although on the sellers’ side some thinks there can be resistance from the EU side. Meanwhile, not only Turkey’s import scrap prices are declining, but other regions are also reducing their bids for scrap. Pakistan has cut its bids for European scrap, scrap demand coming out of Egypt is now lower, India has limited inquiries. A Baltic-based scrap supplier said today that “We see, current finished steel prices are the result of higher priced scrap purchases and there is no demand in Turkey. Hence, scrap is vulnerable. We expect finished steel prices to move down.”
Short sea scrap prices have also declined to the range of $375-380/mt CFR, fixed in deals from Bulgaria and Romania. The pressure on short sea scrap is expected to increase in the coming period.