Posted on 29 Apr 2020
Turkish mills are exerting increasing pressure on scrap prices, although their demand for scrap remains very low.
Mills’ price expectations for scrap have decreased following the latest St. Petersburg-origin scrap deal which was concluded last Friday at $242/tonne cfr Turkey for HMS 1&2 80:20.
A Turkish scrap agent tells Kallanish: “When we offer a price, they [Turkish mills] refer to the latest deal. However, suppliers are yet to meet that price expectation. Therefore, there is no trade.”
A European scrap supplier adds: “With the current dock prices and inflow rate in the EU, Turkish mills’ price expectations are not meetable. Referring to a trader’s sales is not reasonable. We don’t know if they are in a back to back situation or going short.”
A Baltic-origin supplier is heard to have offered HMS 80:20 at $251/t cfr Turkey, and US suppliers’ offers are also expected to appear at these levels. A short-sea HMS 80:20 scrap offer from the Adriatic was heard at $240/t cfr. A Canadian scrap supplier that offered HMS 80:20 at $257/t cfr last week is heard to have directed its cargo to Egypt when it saw no buying interest from Turkish mills.
A US scrap supplier tells Kallanish: “Mills initially wish to see prices bottom. This is a very common practice in falling markets. When the low demand for finished steel is combined with this situation, they are not rushing to buy scrap. Quite understandable.”
Turkish mills are cautious over scrap purchases as they are receiving no finished steel demand. Their rebar offers have consequently decreased further. As they have been unable to reflect the latest scrap price increase to rebar, they are not willing to pay the offer prices for scrap, which will further tighten their margins.
Under current market conditions, if a Turkish mill would decide to buy a scrap cargo this week, it would not pay above $245/t cfr Turkey for US- or Baltic-origin HMS 80:20. Moreover, it is thought that a supplier offering $250/t cfr for the same grade would accept that price.
Source:Kallanish
