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US ferrous export prices fall on Turkish sales

Keywords: Tags  ferrous scrap, steel scrap, scrap exports, export prices, scrap prices, HMS, heavy melt, shredded scrap Turkish bookings

CHICAGO — Turkish steel mills succeeded in driving U.S. scrap export prices down about $10 per tonne after three bulk cargo sales in 10 days.

This put prices for an 80/20 mix of No. 1 and No. 2 heavy melt scrap well below the prior level of $375 to $378 per tonne.

After three weeks of inactivity, the first U.S. cargo to Turkey sold about 10 days ago at close to $369 per tonne c.i.f. Turkey for HMS 1&2 (80:20), market participants said. Since the cargo was reportedly less than 30,000 tonnes and has a two-port loading, it is expected to carry a significantly higher freight, which sent f.o.b. prices plummeting a week ago to around $335 per tonne f.o.b. New York from $354 per tonne the prior week.

However, sources said at the time that the next 40,000-tonne sale would give the market a truer indication of price levels, and a large bulk vessel finally traded late last week after another cargo was booked out of Puerto Rico at prices of $367.50 to $369 per tonne c.i.f. Turkey.

Market participants said one U.S. exporter sold a large 45,000-tonne cargo comprised only of heavy melt and plate and structural scrap at a price basis of $366 per tonne c.i.f. Turkey for the HMS 1&2 (80:20) component.

The Sept. 13 sale caused AMM’s East Coast Ferrous Scrap Index to settle Sept. 16 at $344.48 per tonne, down from $354.21 per tonne in mid-August, when the last cargo of a similar size was sold to Turkey.

Many sources expressed no surprise that it took Turkish mills about a month to return to the market.

"After buying 75 cargoes (from June to mid-August) the Turks took a break. So if you have to sell and only know how to sell to Turkey, then you need to make it attractive," one market participant said of the lower export prices to Turkey.

A buyer for one Turkish producer said declining prices were a result of poor product sales and possible escalation of the ongoing conflict in Syria.

Another source in Turkey said that lower billet prices and the uncertainty in Syria have worked to drive prices lower, while a third said it was due to a stronger dollar. A fourth source suggested it was driven primarily by weak finished steel sales.

"The crisis of sales of finished steel is very serious and scrap prices many times do not cover the costs of the steel mills. Unless Turkey re-enters the market with volume purchases like in August, the prices will go weaker," the fourth source said.

Meanwhile, another U.S. source said lower European sales were a contributing factor. "The (export price drop) seems to be more the fact that there is a willingness by Black Sea and some European suppliers to dump material in anticipation of dramatic weakness down the road. Therefore (a U.S. exporter) probably took the first sale in a weakening market hoping to avoid getting squeezed further," he said.

West Coast exporters also logged some activity last week after a similar spell of inactivity, with one South Korean consumer booking three bulk cargoes at a reported price of about $365 per tonne for HMS 1&2 (80:20) c.i.f. Korea.

As a result, AMM’s West Coast Ferrous Scrap Export Index settled Sept. 16 at $337.14 per tonne, down marginally from $337.58 previously.

Editor's note: This story was updated Sept. 27. Due to a reporting error, an earlier version of this story misstated AMM's East Coast Ferrous Scrap Index settlement price. The correct price as of Sept. 16 is $344.48 per tonne.

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