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Bulk scrap export prices to Turkey slip further

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

NEW YORK — U.S. bulk ferrous scrap export prices to Turkey slipped this week as market participants continue to debate whether prices are nearing a floor.

Two Turkish mills reportedly booked cargoes from a U.S. supplier at around $358 per tonne for an 80/20 mix of No. 1 and No. 2 heavy melt, down 1.1 percent from $362 a week ago (, Feb. 10).

In addition, a third Turkish mill booked two 25,000-tonne cargoes out of the United Kingdom at $351 per tonne for HMS 1&2 (80:20), sources said. British heavy melt typically sells at a discount to U.S. material.

Export prices to Turkey have dropped by around $40 per tonne since the start of this year, and buyers and sellers offered mixed views on whether this slide will continue or level off in the coming weeks.

Some market participants said the current bearish sentiment—driven by an apparent oversupply of U.S. scrap—could lower prices to around $350 per tonne and then hold as Turkish mills look to keep rebar prices at or near $550 to $560 per tonne f.o.b. Turkish port.

"I guess we are reaching the bottom," one Turkish mill buyer said. "Turks are running with very low inventory. On the other hand, I am not expecting a bounce back since price and demand for products is running very slow. Therefore, there is no change in terms of margins for steel producers."

A second buyer agreed, saying that while it is tough to predict price direction, the situation appears to be "near to the bottom" for scrap. Current rebar prices are around $560 to $570 per tonne, he said.

"It seems that rebar prices may soften to $550 (per tonne) and scrap may go down to $345 (per tonne) in the short term," a third buyer said. "I believe that these levels might be the bottom for scrap and we can see a stable market for a while."

A few Turkish traders were more bearish, however, saying they expect Turkish mills to take advantage of the current scrap supply to try to drive prices down further.

"With multiple cargoes around, Turks will not hesitate to try to reduce the scrap price and maximize their profit margin," one trader said.

One European seller said that some of the bearish sentiment stems from his outlook for finished steel product sales out of Turkey. "The market does not look good for finished products. There is pressure from Ukraine to sell at lower numbers, which are approximately $10 (per tonne) lower than Turkish material. It will also depend on the availability of scrap at U.S. East Coast terminals and on the scrap market in the U.S. in March."

"Turkish mills are seeing a number of traditional volume markets being closed or semiclosed due to trade restrictions, competition from Chinese product or local competition," a source out of Europe said. "To accommodate the same volumes they need to do so at lower prices, so they are pushing for cheaper raw material. I do not see a change short term, although they are also reducing production."

Most sources said scrap prices in the coming weeks will hinge primarily on the actual supply situation at U.S. export docks and the prices they agree to as they navigate an apparent oversupply that caused some exporters to sell grades such as heavy melt and shredded scrap into the domestic market this month.

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