EU rocks the ferrous import boat

While Brussels plans import restrictions from next year, more immediately a strong Euro and bullish freight rates prevent recyclers from lowering offers.

Turkish deepsea imported scrap prices remained rangebound throughout September and October amid weak downstream demand and firm price targets from recyclers. Bullish ocean freight rates, a strong Euro against the US dollar and challenging scrap collection costs in the eurozone prevented recyclers from lowering offer levels.

The freight rate from the Baltic region to Türkiye was reported to have climbed to around US$ 44 per tonne in September from US$ 28-30 a couple of months before, according to an agent source.

Supramax availability remained scarce from the US, another source said, with the Handymax freight rate from the US to Türkiye also around US$ 44 per tonne in October. ‘Given these freight rates, there is no scope for scrap prices to come down,’ the second source added.

In September, scrap collection costs in Europe were reported at EUR 240-245 per tonne delivered to docks, according to several sources. In October, collection costs continued to hover around EUR 245-250 per tonne.

Weak demand

Incoming billets from Asia have also suppressed scrap demand from buyers. Platts, part of S&P Global Commodity Insights, assessed the price of Chinese billets at US$ 424 per tonne FOB on 17 October, the lowest since 3 June when the price had fallen to US$ 417. Weak demand from buyers was reflected in import volumes, which fell in the first nine months of the year.

Market participants also remained watchful of Chinese production control measures and supportive economic policies introduced during China’s Fourth Plenary Session. Chinese billet prices have witnessed modest gains with offers heard at US$ 470-475 per tonne CFR Türkiye levels, accounting for US$ 35 per tonne Supramax freight rate from China to Türkiye, according to a recycler source.

India’simported ferrous scrap market is reported to have been subdued in early November amid weak steel demand and competitive domestic scrap prices.  

With Turkish buyers shying away from higher prices for scrap, market participants noted an improvement in Egyptian demand on the back of an antidumping duty imposed on billets effective from 15 September.

Price dynamics

Meanwhile, tepid downstream sentiment made Turkish mills exert pressure on prices as the scrap-rebar spread hovered around US$ 190 per tonne, with several producers putting the break-even level in the range US$ 180-200.

September started off with the premium HMS 1/2 80:20 scrap price assessed at US$ 343.50 per tonne CFR Türkiye, according to Platts data. The price fell to US$ by 17 September, moving up to US$ 342 by the end of the month.

The Turkish export rebar price over the period was assessed at US$ 539 per tonne FOB on 1 September, falling to US$ 534 on 22 September. The price improved to US$ 536 by 30 September.

October started off on a softer note for premium HMS 1/2 80:20 scrap, which was assessed at US$ 345 per tonne CFR, while export rebar price was still at US$ 536 FOB. The rebar price recovered to US$ 547.50 on 15 October before slipping to US$ 540 on 22 October, where it remained stable for the rest of the month.

Premium HMS 1/2 80:20 scrap prices remained largely rangebound throughout October, hovering around US$ 350-353 per tonne CFR as the market remained in a stalemate.

While recyclers cited the upcoming winter and a lack of inbound flow of scrap leading to supply tightness as reasons for higher offers, buyers resisted prices going north of US$ 350 per tonne.

Outlook

Market participants in the Turkish scrap market anticipate prices to move sideways with some possibility of a slight uptick. ‘Scrap prices may go higher than US$ 355 per tonne CFR Türkiye levels but after that there could be corrections,’ a trader said, adding that prices were unlikely to hit US$ 370.

While recyclers in the US continued to target trades above US$ 353 per tonne CFR as winter approached and supply tightened ahead of December procurement by Turkish mills, some traders pointed out that typical seasonal winter tightness had not been observed in the last couple of years.

Market players also remained concerned about the EU’s proposal to reduce tariff-free export quotas and its impact on exports.

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