Escalating Turkey sales light fire under US export, domestic scrap markets

Global deep-sea ferrous scrap sales to Turkey are ramping up at higher prices, stoking bullish sentiment for US exports and March’s domestic trade alike

Three further US deep-sea ferrous scrap cargoes have been heard concluded to the region in recent days, constituting a hefty $29.50-32.50 per tonne increase to the last US sale to the region, exceeding pre-earthquake levels and bringing the US tally of sales for February to six.

An East Coast exporter sold a cargo to a Turkish mill comprising an 85:15 mix of No1 and No2 heavy melting scrap priced at $455 per tonne CFR, shredded scrap priced at $470 per tonne CFR and bonus-grade material priced at $473 per tonne CFR, Fastmarkets learned on Thursday February 23. The HMS portion of the cargo is broadly equivalent to $452 per tonne CFR for an 80:20 mix of the grade.

A separate East Coast exporter sold a cargo to a different regional mill comprising HMS 1&2 (90:10) priced at $442 per tonne CFR, sources told Fastmarkets on Wednesday February 22. This would equate to $437 per tonne CFR on an 80:20 basis.

Another East Coast exporter was heard to have sold a cargo inclusive of HMS 1&2 (80:20) priced at $438 per tonne CFR and shredded scrap priced at $458 per tonne CFR to that same mill, Fastmarkets heard on the same date.

A fourth North American exporter is also understood to be in the market to Turkey.

Prior to these three fresh deals, prices were $420.50 per tonne CFR for HMS 1&2 (80:20) and $440.50 per tonne CFR for shredded and bonus scrap in a deal done on February 16.

Sources indicated that a further 500,000 tonnes of ferrous scrap — which could be as many as 16 cargoes based on a minimum tonnage of 30,000 tonnes — may be needed for shipment in March.

Global ferrous scrap export market

The running tally for global cargoes booked by the region has now exceeded the 20 cargoes initially expected to be purchased in February.

These requirements are bolstered by reconstruction plans for the southeast of the country, which has been decimated by three earthquakes, the most recent of which occurred on Monday February 20.

Reconstruction — which the Turkish government has already said will require 4 million tonnes of rebar — is expected to begin in earnest in three to four months’ time, sources stated, before indicating that a tender is now out to build 200,000-250,000 new houses as soon as March.

A source estimated local Turkey rebar sales at $740-745 per tonne this week.

US sellers are already targeting prices higher than those in recent sales amid rampant demand — European sellers sold to Turkey at the equivalent of $433-439 per tonne for HMS 1&2 (80:20), and US exporters are keen to exceed that level.

US domestic sellers with export capability are also ready to reap the rewards of surging export in March’s domestic ferrous scrap trade, with one seller in the Philadelphia market anticipating that increases will overtake those in February, when the local market rose by $20 per gross ton, particularly for prime grades.

A European sale of busheling was recently concluded to Turkey at $467 per tonne CFR, which is equivalent to $472 per tonne CFR for US origin material. Philadelphia prices for busheling were $440 per gross ton in February, meaning that domestic mills would have to raise prices significantly just to compete with exports, not to mention be competitive in domestic negotiations.

Primes are going to have to be up $40 per gross ton at least

“Primes are going to have to be up $40 per gross ton at least. Domestic mills are asking for a lot from us and if they want it, they’re going to have to pay at least up $40 per ton to get it,” a local seller there said.

Other grades are expected to rise alongside busheling, but to what extent remains uncertain.

Sentiment for rising export prices to Turkey is also moving to the West Coast.

Asian ferrous scrap buyers

Buyers in India and Bangladesh have made bids to certain West Coast exporters of $460-465 per tonne CFR for shredded material but have been rebuffed, with sellers confident that the market is moving up on Turkey’s coattails.

When countered, a Bangladeshi buyer reportedly bid as much as $475 per tonne for the material but was again refused, with the price not deemed high enough by the exporter in question.

“If prices to Turkey are going up, Asian buyers will try to deflect the increase, only to claim it affects them when prices are going down… But Turkey is a good barometer for us, and it is only a matter of time before we sell to Turkey if Asian mills won’t raise prices,” a West Coast exporter told Fastmarkets.

The freight differential for the two routes could be offset if prices to Turkey continue to rise — shipping for deep-sea from the US West Coast to Asia was broadly assessed at $47 per tonne versus around $65 per tonne to Turkey by sources on February 22.

Dock yard buying prices on both US coasts held firm in the week to Tuesday February 21, with rising export yet to manifest in buying prices.

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