WEEKLY SCRAP WRAP: Turkish demand boosts global scrap prices

Strong demand from Turkey, the world’s largest scrap importer, raised global scrap prices sharply during the working week from Monday August 7 to Friday August 11.

Turkish steel mills have booked seven deep-sea cargoes this week, totalling 230,000 tonnes, and the prices have increased rapidly to historically high levels.

Turkey imports
Turkish steel mills paid higher prices for scrap every other day this week as the demand for finished steel, especially in the domestic market, supporting strong costs.

The daily scrap indices reached their highest levels since September 26, 2014, with news of fresh cargoes sold at the end of the week.

A steel mill in the Iskenderun region booked a European cargo, comprising 20,000 tonnes of HMS 1&2 (75:25), 9,000 tonnes of shredded, 8,000 tonnes of a mixture of HMS 1 and P&S, 2,000 tonnes of busheling and 1,000 tonnes of tin-can bundles, at an average price of $354 per tonne, on August 11.

Another steel producer in the Iskenderun region booked a US cargo, comprising HMS 1&2 (80:20) at $353 per tonne, shredded at $358 per tonne and bonus at $363 per tonne cfr on August 10. However, the tonnage breakdown was not clear at the time of publication.

The same mill also booked a New Zealand cargo, comprising 11,000 tonnes of HMS 1&2 (80:20) at $354 per tonne, 6,000 tonnes of shredded at $359 per tonne and 13,000 tonnes of bonus at $364 per tonne cfr, also on August 10.

A steel producer in the Marmara region booked a European cargo, comprising 20,000 tonnes of HMS 1&2 (75:25), 10,000 tonnes of shredded and 5,000 tonnes of P&S, at an average price of $340 per tonne cfr.

A steel producer in the Marmara region booked a Baltic Sea cargo, comprising 21,000 tonnes of HMS 1&2 (80:20) at $340 per tonne, 3,000 tonnes of shredded at $345 per tonne and 4,000 tonnes of bonus at $350 per tonne cfr, on August 9.

A steel mill in the Izmir region booked a UK cargo, comprising 16,000 tonnes of HMS 1&2 (80:20) at $333.50 per tonne and 6,000 tonnes of shredded at $338.50 per tonne cfr, on August 8.

Another steel mill in the Marmara region booked a European cargo, comprising 20,000 tonnes of HMS 1&2 (75:25), 5,000 tonnes of 4A-grade new automobile factory bales, and 10,000 tonnes of P&S, at an average price of $336 per tonne cfr.

Market participants were expecting prices to rise even further because of the strong markets for billet and finished steel.

“The international billet [markets are] very firm right now. People are concerned that prices in Turkey were overheated but, if China moves up, they will have to follow,” a trading source said.

“The market is crazy. Turks bought scrap from New Zealand, which is extremely unusual. People expect prices to go up to $370 per tonne cfr for HMS 1&2 (80:20),” a Turkish source said.

“Domestic rebar demand is strong and prices are still increasing,” another Turkish source said. “I think we will see further increases in scrap prices.”

USA exports
The US scrap market was also enjoying the rising prices in Turkey over the past week.

The US ferrous scrap bulk export market paused until Friday, when a Turkish cargo broke the silence, but recent sales by Turkey and global dynamics are both working to bolster hopes that sales from the US domestic market will soon resume.

An export source indicated that the recent run-up in prices is probably not finished, because coking coal and iron ore prices are rising and Turkey cannot rely on expensive billets to supplement its melting needs, which would lessen its dependence on scrap.

Chinese billet prices are now being quoted at $515 per tonne fob, another export source said, adding that prices for billet were not an option three weeks ago when they were selling for $470 per tonne.

Taiwan imports
Taiwan’s import prices for containerised HMS-grade ferrous scrap have risen by $5-15 per tonne over the past week, as the local mills have accepted the higher offers heard earlier.

The increases followed the dynamics in the key market of the world’s largest ferrous scrap importer, Turkey.

The higher imported scrap prices in Taiwan initially met with customer resistance because of the weak domestic demand for rebar.

“Demand for rebar is so-so in Taiwan. There is not enough government investment in construction,” one trader said.

“The producers have tried to relay their raw material price rises to their end-users. But the rises happened too fast in rebar, so the buyers are in wait-and-see mode,” another trader said.

Two large buyers have reported making purchases of USA-origin HMS 1&2 (80:20) at $285 per tonne cfr Taiwan.

Information about deals at prices between $295 and $290 per tonne cfr Taiwan was also circulating in the market. Offers for USA-origin HMS 1&2 (80:20) were reported at $295-298 per tonne cfr.

Meanwhile, Taiwan’s domestic rebar offers were said to be NT$15,100-15,200 ($498-501) ex-works this week, up by NT$300-400 ($10-13) week-on-week.

India imports
The Indian steel scrap import market has moved higher this week, with both prices for HMS 1&2 (80:20) and shredded material increasing in line with surprisingly strong competition from Turkey, as well as firm steel export demand for billet and rebar in the markets in Southeast Asia, such as Indonesia and the Philippines.

Indian import prices for HMS 1&2 went up by $5 per tonne at the top end to a new range of $290-300 per tonne cfr Nhava Sheva, while shredded prices were up to $323.28 per tonne, from $317.60 per tonne a week ago.

UK shredded scrap offer prices were as high as $310-330 per tonne amid keen demand from Turkey for British scrap, which has prompted increased domestic sales prices in the UK, sources said.

A clearer direction for import prices to the country should be seen at the end of August or early in September, market participants said.

That is when the current shipments in transit are expected to arrive, and domestic steelmakers in India should reveal their raw material needs for their fourth-quarter production schedules, Metal Bulletin has learnt.

Turkey domestic
Turkish domestic scrap prices continued to rise on strengthening imported scrap values at the beginning of the week.

Declan Conway in Galway, Nadia Popova in Moscow and Mei Ling Toh in New York contributed to this report.