In late December, Turkish scrap market is quiet due to holidays. While the key US and European suppliers are away from the market until the end of Christmas holidays, Turkish mills can focus on steel product sales in hope that customers will still accept another rise in their quotations. Having failed to pass the latest increase in raw material prices on to finished steel consumers, steelmakers have become inactive in a week before Christmas.
At present, prices for European and US material are nominal – it is just the price outlook of market participants for the end of holiday season. According to traders, exporters in the US east coast will quote at least $470/t C&F Turkey for HMS 1&2 (80:20) (up $5/t w-o-w) and $475/t C&F for shredded scrap ($470-475/t C&F Turkey at the end of December).
Moreover, supply of US scrap is unlikely to grow in the Turkish market early next year. Thanks to intensified consumer activity in the machine building and traders'' restocking on finished products ahead of New Year, US mills managed to expand production and, accordingly, raw material consumption. Therefore, local scrap collectors could not export much.
Similar situation is observed in the material supplies from the EU. In the second half of December, the majority of local suppliers sold nearly all January quantities, so they will execute existing contracts in the first weeks of next month. In addition, stronger demand from domestic consumers, who have not become aware of the material shortage yet, may shortly cause a decline in supply of European material. If their demand stays firm in January, the European scrap market may see a buying spree.
In case domestic US and EU prices come up to the level at which they can compete with export ones, Turkish steelmakers will be able to book HMS 1&2 (70:30) at $460-465/t C&F Turkey, HMS 1&2 (80:20) – at $470-475/t C&F Turkey and shredded scrap – at $480/t C&F Turkey.
Nevertheless, the situation is not hopeless for Turkish mills. In mid-December, they purchased almost all quantities required in January. Hence, they will not have urgent need to buy more scrap immediately after holidays. The mills’ further actions will depend on whether end-consumers accept the further upswings in finished product prices or not. In the latter case, steelmakers will be able to stand a three-week siege.
Furthermore, they can rely on some support from the suppliers based in the Black-Sea basin who are unable to force prices up by themselves and can sell the material at the current levels. For instance, exporters from Rostov-on-Don have reportedly managed to close two deals at $465/t C&F Turkey and $470/t C&F Turkey, respectively. The difference in prices is due to higher freight rates included in the latter. At the year end, there are offers of HMS 1&2 (80:20) at $465/t C&F.
In January, the upward price trend may only discontinue, but not turn around. Most traders, however, are optimistic forecasting further growth of scrap quotations.
Source: www.metalexpert-group.com