Turkey has concluded another ex-Europe scrap deal and prices have moved up significantly. As Turkey starts buying deep sea cargoes for March shipment, the question is the pace of the upcoming procurements, which will have a big impact on the prices.
SteelOrbis has learned that a Black Sea-based producer has concluded the ex-UK booking today, January 31, for 20,000 mt of shredded scrap at $442/mt CFR and 20,000 mt of bonus grade scrap at $442/mt CFR. The cargo will be shipped early-March. With the $20/mt difference between shredded and HMS I/II 80:20 scrap along with the additional approximate $2-3/mt additional freight for this producer, the HMS I/II 80:20 scrap indication is around $420/mt CFR. This level shows a $8/mt rise for the European scrap.
A source from a major mill agrees that “All will depend how fast Turkish mills will return to the market for new cargoes to be shipped in March.” Workable ex-US scrap prices are considered to be at least $425-426/mt CFR. A major US scrap supplier commented that “There is a positive sentiment in the market since scrap flow in the US is also slow. No one is in a rush to sell.” The availability of scrap in the EU remains on the low side, and the freight is moving up. Multiple market sources report that freights are moving up for Turkey in a fast pace. The problems regarding Red Sea are still not solved and the tonnages carried over the Suez Canal continue to decline, forcing major maritime firms to take the longer route. “Also, disrupting scrap shipments to India,” a source reported SteelOrbis today. According to Reuters; Jan Hoffmann, UNCTAD's head of trade logistics, said there were now three key global trade routes disrupted, also including flows of grain and oils since Russia's invasion of Ukraine, and the Panama Canal, where low water levels from drought meant shipping last month was down 36% year-on-year and 62% from two years ago. "We are very concerned," Mr. Hoffman told in a briefing, "We are seeing delays, higher costs, higher greenhouse gas emissions." It is certain that scrap suppliers will try to pass on at least some of the increases observed in freight to buyers. With the slow scrap flow to export yards, firm stance on the sellers’ side and the rising costs, when Turkish mills return to the market for more cargoes, scrap prices are expected to move up again. Having said that, finished steel segment fails to recover in Turkey, particularly on the longs segment. Domestic rebar prices are being revised upwards but official list prices still fail to attract interest. Therefore, the margins of Turkish mills are expected to remain tight and are not expected to give much room for a surge on the raw material side if things do not change.
Workable levels for the short sea HMS I/II 80:20 scrap prices are now in the range of $398-400/mt CFR, moving up by $3/mt on the lower end. Following the new deep sea deal, some mills think the short sea scrap offers will be around $400/mt CFR Turkey with a room for negotiation. Due to the silence in Turkish import scrap market, short sea offers to Turkey were quiet. “Now things may change,” a source commented.