Factors likely to boost scrap prices counterbalanced by reduced demand for finished steel and weaker domestic US markets.
Prices for Turkish imports of ferrous scrap remained largely within range throughout May and June. Factors typically driving up prices, such as firm collection costs, limited availability in Europe and the strength of the Euro against the US dollar, often conflicted with reduced demand for Turkish finished steel and a weak US domestic scrap settlement.
Platts, part of S&P Global Commodity Insights, assessed Turkish bulk imports of premium heavy melting scrap 1/2 (80:20) at US$ 386 per tonne CFR on 21 June with prices trading within a tight range of US$ 379-386 per tonne CFR to the same date and from US$ 378.50 to US$ 384.50 per tonne CFR throughout May.
During this period of price stability in the Turkish ferrous scrap market, the mills underwent rounds of intense restocking which resulted in small price increases, with sellers unable to increase prices significantly despite the flurry of bookings in a short space of time.
MORE COMPETITIVE
Turkish mills were more competitive in the global markets for rebar exports for a time with prices under US$ 580 per tonne FOB in line with competing Algerian and Egyptian export prices, according to market sources, and fetching demand from buyers in the Balkan and Middle Eastern regions in late May and early June.
Several deals were reported to Platts in this period, typically around US$ 570-575 per tonne FOB. As such, the mills were said to have booked large volumes of bulk ferrous scrap over May, but pressured recyclers into rangebound pricing to maintain an outright CFR scrap-FOB rebar spread close to US$ 200.
This is a value commonly cited by the mills as the current target level for rebar production. From 14 May until 21 June, the outright CFR scrap-FOB rebar spread remained between US$ 191 and US$199.50.
With the mills claiming margins were already tight and that any increases in scrap prices would erode their margins further, sellers reported firm collection costs for HMS in Europe.
Recyclers in both the Benelux and Baltic regions were unable to push collection prices below EUR 300 per tonne delivered to the docks at the very bottom and costs mostly ranging from EUR 305-320 per tonne delivered to the docks in May and June.
EURO v US$ STRENGTH
Sellers in the European region were also not helped by the strength of the Euro against the US dollar which Platts assessed at US$ 1.0681 at the start of May and strengthened to a recent peak of US$ 1.0887 in early June, suggesting a reduction in competitiveness for dollar-denominated offers from European recyclers.
In early June, recyclers in the region kept offers firm and pushed strongly for higher scrap prices from Turkey but sellers in the US region faced a weak domestic scrap buy week which dampened near-term price sentiment and eliminated any possibility of a sharp rise in prices.
During the US domestic June buy week, heavy melting scrap prices for June delivery were assessed US$ 25 lower at US$ 310 per light ton delivered Midwest on 7 June and fell by US$ 5 to US$ 330 delivered Southeast.
However, export offers from the US were mostly firm despite this. Sources suggest US-based recyclers were holding prices firm, along with the Europe-based recyclers who faced firm collection cost and limited availability. Prices remained largely stable despite softer domestic US settlements being usually indicative of a decline in Turkish import scrap prices.
The Euro has since sharply depreciated, mostly due to a snap election in France. This could help to soften US dollar-denominated offers from Eurozone sellers in the near-term.
Read the full ferrous market analysis in our latest issue >>
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