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Turkish exports of rebar may lift scrap demand

Keywords: Tags  scrap, bulk scrap, ferrous scrap, scrap exports, scrap prices, HMS, heavy melt, Sean Davidson

 NEW YORK — Prices for bulk ferrous scrap exports to Turkey trended sideways this past week as higher freight rates put a damper on recently booked vessels.

Market participants reported just two cargo sales to Turkey this past week: one each from Europe and the United States at $389 per tonne c.i.f. Turkey for an 80/20 mix of No. 1 and No. 2 heavy melting scrap.

A modest increase in bulk freight rates, however, meant that pre-shipping values for U.S. scrap lost a little ground as AMM’s weekly East Coast Ferrous Scrap Export Index settled Nov. 25 at $357.08 per tonne f.o.b. New York, down 0.7 percent from $359.65 per tonne a week ago.

Several sources said they expect scrap demand to spike this week, noting that improving conditions in Turkish exports of finished product to Egypt could prove to be the catalyst. However, most were uncertain about what this demand means for scrap prices.

"The coming week would be of interest in seeing the impact on Egypt’s decision on (the) termination of the safeguard duty on imports of rebar and wire rod," according to one exporter.

Domestic demand for finished product remains nominal, but there is enough positivity in its export markets to lift scrap demand, a Turkish trader said.

"In the export market there are two good potential developments. First, I heard Egypt took off the anti-dumping (duty) on Turkish rebar and billet. Secondly, it’s under discussion that Turkish banks can be reactivated with a money transfer with Iran, so there might be sales if this takes place," he said.

"(Scrap) talks will restart either late this week or early next week. Turkey might buy around 10 to 15 cargoes, or if the current situation continues on the product side they might take the decision to slow down production like they did in December 2012," he added.

However, the mood has already turned positive, a second Turkish trader said. "Turkish mills sold approximately 60,000 to 70,000 tonnes of rebar to Egypt last week. The sales prices are so good that the market is relaxed now. I think Turkish mills will buy more scrap," he said.

Some exporters suggested that seasonal supply tightness in North America and Europe will also cause Turkish mills to book a flurry of cargoes in the next two weeks.

"Based on the minimum 2 (million) to 2.5 million tonnes of monthly demand, they bought not even half as far as I know. Furthermore, winter is close so there will be no shipments between Dec. 20 and Jan. 7," one European exporter said.

But other market participants aren’t as bullish on demand.

"Many mills postponed their purchases to push down prices, and next week the market will move according to who is strong. I believe mills are not strong enough," a third Turkish trader said.

One U.S. trader said demand will be nonexistent this week due to a short trading week.

"More scrap should stay domestic. The Turks have a huge margin squeeze at the moment and can’t afford to buy U.S. scrap at competitive prices. So they will buy billets and try to sell rebar using the more competitive billets," he said.

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