China's Ministry of Finance removed the export tax rebate on some steel products on May 1.

The news boosted demand for steel and, in particular for steel billet, in Asia, and that triggered the rush to book more scrap in Turkey at the end of last week.

The most recent deep-sea transaction was recorded on Friday April 30, when a steel mill in the Iskenderun region booked a European cargo, comprising 20,000 tonnes of HMS 1&2 (80:20), 8,000 tonnes of shredded, 10,000 tonnes of bonus and 2,000 tonnes of busheling at an average price of $453 per tonne cfr.

At the end of last week, market participants estimated the price of HMS 1&2 (80:20) at about $448 per tonne cfr, which led to a near $22-per-tonne increase in Fastmarkets' daily scrap indices.

Scrap suppliers withdrew their offers following the sharp rise in prices and demand and only two suppliers were active in the market on Tuesday, sources said.

A Baltic Sea supplier was heard offering a cargo at $465 per tonne cfr, while a supplier from the United States was offering HMS 1&2 (80:20) at $462 per tonne cfr.

“The scrap merchants are mostly worried. We cannot offer material, as it is not clear where the market is heading,” a trading source told Fastmarkets.

Another source said: “There is almost no scrap on offer in the market. We expect prices to reach to $475 per tonne cfr and above on an HMS 1&2 (80:20) basis.” 

And a Turkish mill source agreed.

“The prices skyrocketed everywhere after the news from China to remove the tax rebate. There are no scrap offers in the market [and] I think the scrap prices will soon exceed $470 per tonne cfr,” the source said

As a result of the fresh offers and estimates, the daily scrap indices edged up further on Tuesday May 4.

Fastmarkets’ daily index for steel scrap, HMS 1&2 (80:20 mix), North Europe origin, cfr Turkey, was calculated at $450.58 per tonne on Tuesday, up by $2.11 per tonne compared with Friday’s index.

And the daily index for steel scrap, HMS 1&2 (80:20 mix), US origin, cfr Turkey, was calculated at $455.34 per tonne on May 4, up by $0.90 per tonne day on day.

This put the premium for US material over European scrap at $4.76 per tonne on Tuesday, compared with $5.97 per tonne on Friday April 30.