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 market.
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 European exporter.
"(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.