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
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,
"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
"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.