NEW YORK U.S. bulk ferrous scrap export prices have fallen for the second time in as many weeks as mill buyers in Turkey continue to drive prices down amid weak demand.
According to market participants, a surge in billet imports into Turkey has combined with poor demand for certain finished steel products to send scrap buying prices from the United States significantly below the $373- to $375-per-tonne price range for an 80/20 mix of No. 1 and No. 2 heavy melt that many had expected would be the floor.
At least five bulk sales by different U.S. exporters May 8 at a price range of $367 to $368 per tonne c.i.f. Turkey for HMS 1&2 (80:20) sent export prices down at least $6 per tonne this week from a late-April range of $373 to $375 (amm.com, April 29).
A scrap buyer for a Turkish steel producer said he thinks prices are falling due to weak scrap demand from export markets and the U.S. domestic market, as well as increased billet imports into Turkey.
"Other buyers will force lower levels (than $368). In my opinion, it can drop to $365 or even $360. ... The demand from export market is not high and local market demand is not enough to support production, either," he said.
High levels of billet imports are also entering the Turkish market, sources said, displacing mills need for scrap.
"Those factors affect scrap demand negatively," the scrap buyer said.
An exporter agreed that billet trade was adversely impacting scrap demand and, hence, prices.
"Its not only the competition between deep-sea and short-sea markets or (between) the U.S. and European Union markets to get rid of these typical Turkish export qualities. The biggest enemy of scrap is billet. Turks lose money melting scrap but make money using billets," he said, noting that he thinks scrap prices could fall further still.
"There is not enough domestic demand in Ukraine and China, and as the lowest price in the near past was $133 for HMS 1&2 (70:30) (in 2008), there are still some dollars to go, I guess," he said.
A second exporter said he expects U.S. docks to lower buying prices at their yards by at least $10 on May 10. He also speculated that there is still room for export prices to Turkey to drop, "but not by that much. Maybe (to) $360."
Meanwhile, a third U.S. exporter speculated prices are near bottom. "The Turks have done a good job recently of sitting on the sidelines and taking small bites of the apple, unlike in the past when one jumped into the market (and) they all dove in," he said. "I still think there is a little more downward pressure, but I think we are getting close to a floor. (But) understand (that) my crystal ball that has served me well for years is severely cracked."
"One reason I think we are close to a bottom is our domestic market. I had finished all my domestic sales late last week. Between 4 p.m. on Friday (May 3) and 4 p.m. on Monday (May 6), I had received calls from brokers and mills asking if I wanted to increase the tons on my orders. I get the feeling that the mills did not buy all they wanted due to a lack of supply," he said.
A Black Sea exporter told AMM that the latest U.S. sales at lower levels means Turkish mills will now bid between $352 and $355 for Black Sea cargoes of A3 scrap.
"The reality is that Black Sea will not be able to sell at these levels and not even at $360. And the quantities are very limited," he said.
Meanwhile, a U.K.-based exporter said the "market has already overshot bottom." Price differentials between U.S. and continental Europe-origin scrap are getting narrower and not reflective of quality differentials, he said.