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Turks’ European scrap buys lift US’ price hopes

Keywords: Tags  scrap, ferrous scrap, ferrous scrap exports, ferrous scrap export prices, scrap exports, Turkish buyers, Sean Davidson


NEW ORLEANS — Several U.S. exporters hope to see a small bounce in bulk ferrous scrap export prices, with sentiment boosted by a fresh round of Turkish purchases of European material.

A slew of deals concluded over the past four trading days indicate a modest strengthening in prices of European and British scrap shipped to Turkey.

U.S. exporters have yet to log bulk sales to their largest customer this week, and some market participants suggested that only one or two companies likely have the inventory to sell, with others reportedly sold out.

At least seven bulk cargoes were sold from the United Kingdom and Europe over the past week. Normalized prices for an 80/20 mix of No. 1 and No. 2 heavy melt indicate that U.S. tags should range between $340 and $345 per tonne c.i.f. Turkey.

Some Turkish mills have already bid for U.S. HMS 1&2 (80:20) at $340 per tonne, which was met with offers of $345 to $350 per tonne, market participants said. Several sources indicated that deals could be negotiated in between the bid-ask range of $340 to $345 per tonne.

Since the last U.S. bulk cargo sale was booked at a value of about $337 per tonne for HMS 1&2 (80:20), any deals concluded in the current bid-ask range would represent a modest uptick and would halt a three-month price decline.

"Prices have certainly stabilized," one market source said. "There are buyers that would like to buy U.S. scrap at $340. Exporters will push for $345. Whether prices climb back to $350 is still an unknown."

Several market participants found the trend reversal odd, while some maintained that the increases had merit.

"It is strange if Turkey is suddenly raising prices," one European exporter said. "The whole world is still in a deep depression, Asia—especially India—is not reacting."

But a mill buyer said the slight uptick was merely a correction. "The market for scrap went down too much for no reason," he said. "Now it is going up to a level where it is supposed to be."

A U.S. exporter agreed. "(The) scrap price seems to be stabilizing now or even slightly correcting upwards. After the latest sales from Belgium/Holland at $315 for HMS 1&2 (75:25), the U.S. going below $340 c.i.f. Turkey for HMS 1&2 (80:20) has become rather unlikely," he said.

British exporters are also enjoying favorable currency markets, with the latest bulk sale from the United Kingdom to Turkey said to have secured one scrap company an equivalent of $341 per tonne due to better exchange rates.

A fourth source said that many Turkish mills are now actively seeking scrap cargoes, while a fifth said that the mills have either secured new orders for finished product or are stocking material to prepare for the imminent market lull during the Ramadan holiday in the second week of July.

But a few exporters aren’t as optimistic about the market’s direction.

"We do not see a rise in the market," a second European exporter said. "July to August is a vacation period in Europe, with most steel mills closing production due to lack of demand, low prices of steel and most of them working at losses. We expect prices to keep around current levels, and if some seller needs to sell we expect the offer will be lower to get the order."

Current market conditions have offered mills a "buying opportunity," another source said. Weak supply-demand fundamentals for finished steel continue to plague the global market with little respite on the horizon, he said, questioning how long the current scrap price uptick could last.

The Turkish market continues to be affected by cheaper Chinese offers, he said. If Turkish mills choose to compete while paying higher scrap prices, it would result in margin cuts that perhaps only a few Turkish mills would accept to keep furnaces running, he added.


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