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US bulk scrap sale affirms bearish market

Keywords: Tags  ferrous scrap, U.S. ferrous scrap exports, bulk sale, Turkey, prices, No. 1 haevy melt, No. 2 heavy melt, shredded East Coast scrap shipment


NEW YORK — A bulk ferrous scrap cargo has shipped off the East Coast to Turkey at prices well below offers earlier in the week, cementing the bearish outlook that has rapidly gripped the market.

Uncertainty on price direction in the U.S. and Turkish scrap markets forced one U.S. exporter to ship cargo carrying mostly heavy melt scrap at about $10 below prices offered to Turkey Jan. 13, according to sources.

This is the first U.S. bulk cargo sale to Turkey in more than five weeks and market participants said the cargo shipped Jan. 15 at $396 per tonne c.i.f. Turkey for an 80/20 mix of No. 1 and No. 2 heavy melt. Barely a day or two earlier, U.S. offer prices were reported in a range of $405 to $412 per tonne, while Turkish mills countered with bids in a range of $395 to $400 per tonne (amm.com, Jan. 13).

"There were concerns that U.S. domestic scrap prices are coming down, so it’s just locking in sales. You don’t want to be caught holding the highest inventory," one market participant said.

Concerns that Turkish mills would continue to secure scrap from Europe and leave U.S. exporters with unsold inventory also likely contributed to the exporter’s reasoning for the sale, he said.

The cargo, which also comprised small volumes of other grades such as shredded scrap, was originally offered at $398 per tonne for HMS 1&2 (80:20), according to a source in Turkey.

Exporters are likely to continue gauging domestic mills’ interest in their scrap as Turkey remains reticent on bulk orders and container exports have also dropped significantly.

One U.S. trader said bulk exporters continue to offer scrap to U.S. mills, adding that one exporter unsuccessfully offered shredded scrap into the Ohio Valley at $425 per tonne.

"I think all exporters are trying to sell tons inland. Even at down $30 from earlier numbers it is better than export. Once we get the domestic shred numbers to $410 per ton, then they will stop offering," he said.

Meanwhile, Turkish traders speculate that prices will continue to be under pressure.

"I see the scrap prices loosening in the following weeks since the final product prices are way below the cost," one trader said.

"Turkish mills are currently cutting production from 30 to 60 percent and are still not in a purchasing position," a second trader said.

"Mills have the expectation that there could be a price decrease—that the U.S. will sell at the $385 to $390 level—but personally I believe this is not very possible as there’s not much material available on the market," he said. "I believe only Turkey is having a crisis and the rest of the world has had a hopeful start to 2014."


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