NEW YORK A two-cargo bulk
sale of ferrous scrap from the United States to Turkey has set
the stage for a fresh round of negotiations, with weaker scrap
prices expected to spark the return of Turkish mills to the
Negotiations are expected to
start in earnest April 25, but the sale of two cargoes from one
U.S. exporter to a single mill in Turkey has done little to
offer the market a clear indication of price levels.
The exporter reportedly sold two
cargoes over the span of a week, with one booking concluded
April 12 and the second on April 19, according to several
sources, who reported that each cargoscheduled for May
shipmentwill comprise 37,000 tonnes of an 80/20 mix of
No. 1 and No. 2 heavy melt and 8,000 tonnes of shred.
Market participants said the two
cargoes sold for an average price of $381 per tonne c.i.f.
Turkeydown about $8 on heavy melt prices from the last
U.S. sale to Turkey (
amm.com, April 10)but a few sources said the
earlier cargo sold at an average price of between $386 and $387
per tonne while the second cargo was booked at an average price
of $375 per tonne.
The difference in pricing
indicates a weaker market, and buyers in Turkey could attempt
to take advantage by aiming for HMS 1&2 (80:20) prices of
around $375 per tonne from the United States, according to one
"(The U.S. exporter) sold last
Friday at $386 for HMS 1&2 (80:20) and $391 for shred. (The
Turkish mill) was unhappy about the deal and renegotiated it.
(The U.S. exporter) then gave another one at $375, so that made
the average price for the whole 90,000 tonnes $381, without a
price difference for shred," the source said. "Now mills are
translating this as (the U.S. exporter) sold it at
$375. So they will go for bids at $375. But the deal puts the
value of HMS 1&2 (80:20) at about $380 per tonne."
Most sources contacted by
AMM said they expect Turkish mills to resume buying
bulk cargoes almost immediately, but at least one source said
mills could wait until next week.
"The euro softened, so we may
see some offers from Europe. Turkey may start to buy, but there
is other information that rebar sales prices softened to $590
per tonne. So the market may wait until next week or give bids
at $370 to test the level for U.S. HMS 1&2 (80:20)," a
Turkey-based trader said.
A buyer for a Turkish producer
said he expects mills to push for bids in a $375- to
$380-per-tonne range because U.S. exporters have lowered buying
prices at the dock.
"Turkey needs U.S. scrap to
continue production, so we should hear of new sales this week
and next week," he said. "In my opinion, with current
collection prices in the U.S. East Coast under $320 per tonne,
exporters can make $375 available."
A source at one U.S. exporter
said it is likely Turkish mills will succeed at driving down
prices. "I think $375 will happen for a couple of cargoes, and
I think it increases from there a bit, but not much. I still
think it will be slow, with low volumes traded," he said.
Another U.S. exporter source
said exporters will attempt to resist weaker prices due to high
inventory costs, while a third U.S. exporter source said those
with large inventories will be forced to "dump tonnes."
Meanwhile, a buyer for another
Turkish producer said the problem still lies with demand for
finished products. "Mills are still missing orders. Now, on top
of this, the decrease in scrap prices will have an
extra-negative impact on sales. Therefore, I dont see any
chance for prices to firm up in the short run. ... Even $380 is
high for Turkish mills," he said.