NEW YORK U.S. ferrous scrap export prices to Turkey could be under pressure after a fresh bulk sale this week indicated some softening, according to market participants.
Several Turkish and U.S. sources said they have begun to question the overwhelming bullish sentiment that overtook the market following Hurricane Sandy after two U.S. bulk deals to Turkey were concluded in the past five days at levels slightly below where they had anticipated.
A cargo of about 25,000 tonnes of an 80/20 mix of No. 1 and No. 2 heavy melt, shred, and plate and structural scrap sold off the East Coast to a Turkish mill at $410, $415 and $420 per tonne c.f.r., respectively, according to market sources. A few traders, however, said they had sufficient reason to believe the actual traded price was about $1 or $2 per tonne lower.
The sale, concluded off a tender, follows one concluded late last week at identical price levels. However, the cargo size on last Fridays sale was greater than 40,000 tonnes and will therefore attract significantly lower freight, sources said.
Some sources said their previous bullish sentiment on export sales to Turkey is now being tested.
"(There) seem to be a lot of prompt cargoes not getting sold. I spoke to a handful of suppliers who claimed if they could get short for December shipment, they would gladly take a sale at todays levels," one source said.
This opinion is a notable divergence from the market talk over the previous few weeks that flows into export yards were tight. The earlier speculation that some exporters were struggling to secure scrap to fill bulk orders helped drive the recent bullish sentiment, sources said.
Asked if the availability of prompt cargoes implies that some exporters could be sitting on healthy levels of scrap, the source said, "This is my point and basis for feeling a bit more bearish than earlier. ... Several cargoes looking for a home without success is a sign that the Turks may in fact be successful in resisting higher levels and could put a damper on recent price rises. Im not throwing in the towel just yet, but (I) am concerned."
The source said that he still believes the market will stay strong until the first quarter of next year, but he admitted he is "not nearly as confident as earlier."
A second source said the smaller cargo size of this weeks bulk sale was not a true indicator of the current price environment, suggesting that the next U.S. deal on more than 40,000 tonnes would be a fairer bellwether of the next round of export trades to Turkey.
A third source suggested that Turkish mills have focused their attention on Europe.
"They are trying to secure tonnage out of the European market. Germanys pricing is rising since the increase in demand," he said.
Exporters are likely to continue enjoying current depressed levels on freight rates through November, a fourth source added.