WEEKLY SCRAP WRAP: Softening in Turkish market pushes down global prices

Turkish import scrap prices continued to drop during the working week from Monday September 25 to Friday September 29, with mills buying cargoes at lower prices from both North America and Europe.

The import markets in Taiwan and India have dropped in line with Turkey’s, along with US export and Turkish domestic scrap prices.

Turkey imports
Metal Bulletin heard this week of at least three cargoes booked by Turkish mills, with rumours in the market of further deals being done on Friday.

A steel producer in the Iskenderun region booked a Canadian cargo, comprising 35,000 tonnes of shredded, 10,000 tonnes of HMS 1&2 (90:10) and 5,000 tonnes of bonus-grade scrap at an average price of $325 per tonne cfr, late last week.

The deal, which was reported on Monday, had not been confirmed at the time of publication on Friday.

The same Canadian supplier sold a mixed cargo of 30,000 tonnes of HMS 1&2 (90:10), 15,000 tonnes of shredded and 5,000 tonnes of P&S at an average price of $312.50 per tonne to a mill in the Izdemir region. A further deal concluded by the Canadian exporter was heard on Friday of last week.

And a European supplier sold a cargo of 15,000 tonnes of HMS 1&2 (80:20) priced at $295 per tonne cfr Turkey to a mill in the Iskenderun region, which was understood to have been concluded on Thursday.

Many market participants have spent the week failing to come to any kind of agreement on deals, with parties reaching an impasse over prices.

“It is not clear if we have reached the bottom [of the market] yet. Suppliers may not want to offer at the latest deal’s prices, but instead require a higher price,” a Turkish source said.

“It is a game of nerves,” a European source said.

USA exports
Shockwaves went through the US ferrous scrap export market after the Canadian scrap exporter sold three cargoes totalling 150,000 tonnes of material to Turkey in an effort to get ahead of a slumping market.

After the Montreal-based company closed its latest deal at an average price of $312.50 per tonne cfr, one source said that he was surprised by the price, which was in stark contrast to the $347 per tonne sale for similar material less than ten days ago.

“Things are unravelling quickly and there is just too much scrap available. We are hearing there are 20 cargoes,” one seller to the docks said. He added that European docks have reacted to the news by lowering buying prices by €40 ($47) per tonne.

The latest low-priced deals could prompt mills in Turkey to renegotiate the prices for cargoes that have yet to ship and that were previously agreed at higher prices, a second seller to the US docks said.

A single sale from the US East Coast earlier this week at $330 per tonne cfr for HMS 1&2 (80:20) lowered Metal Bulletin sister publication AMM’s East Coast ferrous scrap export index for this grade to $312 per tonne fob New York.

Indian imports
Prices for containerised ferrous scrap shipments to India dropped this week amid weakening in the global markets and continued low demand for finished steel in the country.

Metal Bulletin’s index for containerised shredded scrap imports into India was $317.19 per tonne cfr Nhava Sheva on Friday, down by $17.58 per tonne week-on-week compared with $334.77 seven days ago.

“There is pressure on sellers which is leading them to lower their prices to generate sales,” one seller said.

“Scrap buying is almost zero because sales in finished products are going down day-by-day, adding to the inventories [of material left unsold]. Mills are thinking of taking a production cut from next month,” he added.

With prices falling, few deals are being concluded, according to market sources.

“When the market falls by $40 per tonne, then you know the buyers want it to drop by another $10 per tonne, so they are sitting tight,” another seller said. “Just 10-15 days ago, the sellers were sitting tight.”

One deal for 1,000 tonnes of UK-origin material was heard at $313 per tonne cfr Nhava Sheva, with another transaction for unknown-origin material closed at $320 per tonne cfr.

Despite the price drops this week, one trader was confident that prices would rebound by the end of next month, when the heavy monsoon rains in India are expected to clear up.

“The monsoon season is ending and should finish by the end of the month,” which would result in better demand, he said.

Taiwan imports
Taiwan’s import prices for containerised HMS-grade ferrous scrap continued to weaken over the past week as bearishness became more common.

Metal Bulletin’s assessment of import prices for USA-origin HMS 1&2 (80:20) into Taiwan was $280-285 per tonne cfr for the week ended Friday September 29, down by $5 from $285-290 per tonne in the preceding week.

Negotiations were mainly done around $280-285 per tonne cfr Taiwan, with a transaction heard concluded at $285 per tonne cfr, continuing a downtrend of the past few weeks.

“With Turkish import prices still dropping, there is no way that buyers will accept the same prices as last week. They are likely to continue asking for lower prices in the near term,” a trader source in Taiwan said on Friday.

“Domestic scrap remains a good alternative for local mills, so it is not likely that the demand for imported volumes will see any uptick in the near term,” a mill source said.

Sources in Taiwan said that while the Golden Week holiday in China next week could offer them some respite from falling prices, the bearish sentiment in the market is expected to remain for now.

Turkish domestic

Turkish domestic scrap prices have continued to fall over the past seven days as demand for the product was weak.

Metal Bulletin’s weekly price assessment for domestic auto bundle (DKP grade) scrap in Turkey was TRY1,040-1,180 ($291-330) per tonne delivered, down from TRY1,100-1,220 per tonne last week.

The downward movement in the assessment came as steel producers in the country lowered their buy prices for the material by TRY40-60 per tonne over the past week.

Nadia Popova in Moscow, Lisa Gordon in New York and Paul Lim in Singapore contributed to this report.

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