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Big decline in Turkish freight rates

September was a tough month for traders with cargo rates to Turkey for HMS I/II falling sharply from just under US$ 300 to nearer US$ 230.

This article is based on our magazine’s latest ferrous market analysis.

After a rollercoaster few months, Turkey’s scrap market experienced a quieter period of trading in August with religious and other public holidays a factor. But this was short-lived into September when prices slumped with, at the time of writing, a reported drop of US$ 62 from the UK scrap prices reported in the last issue. News of these increasingly lower-priced cargoes rippled across the global markets, knocking trader confidence.

Even so, there were more positive sounds when the latest US industrial production numbers for August were seen to be better than expected. The Fed reported that overall output increased 0.6% following a 0.1% contraction in July. Among the individual sectors, manufacturing was up 0.5% and mine production rose 1.4%.

The US manufacturing capacity utilisation rate improved to 75.7% while the total industry rate was at 77.9%. But that had to be set against US Census Data through to July showing exports of ferrous scrap (excluding stainless and alloy steel scrap) down 2.2% as weaker shipments to Taiwan, Mexico, India, Egypt and Thailand more than offset gains in other markets.

Exports to Turkey fell from 387 000 tonnes in June to 325 000 tonnes in July, although that was still up 3.3% year-to-date. In terms of future markets, Data Bridge Market Research produced a report in early September saying it expected the global metal recycling market to reach just shy of US$ 60 billion by 2025, up from US$ 36 billion in 2017. That would be a CAGR of 6.5%.

Trading got off to a subdued start in August when, over a fortnight, only two cargoes were booked, both multi-grade cargoes sold for an average price. A US cargo purchased HMS I/II 90/10 as part of a mixed grade cargo for US$ 294 per tonne, putting HMS I/II 80/20 near US$ 283 per tonne, while another multi-grade cargo included HMS I/II 75/25 at US$ 279, putting 80/20 near US$ 277 per tonne. It was also reported that Turkish mills had begun halting production due to poor finished steel sales in the export markets.

Trading paused during the celebrations for the Eid religious holiday mid-month and after a 10-day break, two European cargoes of HMS I/II 80/20 were sold at US$ 275 per tonne and US$ 274 per tonne. Towards the end of August, there was a US booking of HMS I/II 80/20 at US$ 270 per tonne and a UK cargo of the same grade of material recorded the same price.

The markets remained quiet into September, with ever-lower prices being achieved. A UK cargo of HMS I/II 80/20 was at US$ 250 per tonne, a US$ 20 reduction from the previous UK booking. At this time, two US cargoes booked HMS I/II 80/20 at US$ 261 per tonne and US$ 255.50 per tonne. A Baltic cargo agreed HMS I/II 80/20 at US$ 247 per tonne before further falls to US$ 240 per tonne cfr.

In mid-September, another US cargo HMS I/II 80/20 went for US$ 240 per tonne, a considerable decline in price over just a few weeks as a result of continuing poor demand for finished steel products and the on-going cuts in production. At the time of writing a UK cargo of HMS I/II 80/20 secured only US$ 228 per tonne, down from US$ 250 per tonne at the start of the month. It set a new low for the year. Further downward dips are expected in the next round of bookings.

India & Taiwan

The Indian scrap market during August and September continued to experience price falls with a period of quiet trading and low demand, as well as economic troubles. Trading was reduced by the European summer holiday period and seasonal heavy rains in the country.

At the start of August, imported prices of HMS I/II 80/20 were US$ 265-275 per tonne but week-on-week falls saw prices decline to US$ 250-265 per tonne by the end of the month, following the trend of the weak Turkish market. During September, prices moved down still further with many in the market not wanting to trade due to the decline of the international markets. Prices started the month at US$ 245-260 per tonne for HMS I/II 80/20 but had lowered further to US$ 240-255 per tonne.

In Taiwan, prices started August at US$ 285 for HMS I/II 80/20 but fell to US$ 260 per tonne at the month close, with purchasing of material slowing to reflect lower demand. With the expectation of prices falling further in line with the global trend, September continued the descent with reports of US$ 235 per tonne.

The full ferrous market analysis can be read in our latest issue.

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