The time of reckoning seems to have approached as the feeble vibes of correction became a fully blown pandemic with scrap and long product prices.
Scrap prices crashed by an unprecedented USD 50 per tonne to USD 80 per tonne in a day, sending chills down the spine of operators. The haunting proposition of July 2008 type crash left the market sentiments in tatters.
Although the downpour was on the anvil since the flare up evidenced during the last 2 months was never propped by proportionate demand growth. The edifice was brittle and bound to crumble under its own weight since it was supported by feeble crutches of cost push (scrap and iron ore prices) and stock replenishment fanned by speculation.
The magnitude of downpour can succinctly be summed as follows
1. Turkey on 10th April, initial quotes for billets were at USD 650 per tonne to USD 655 per tonne FOB and Rebars at USD 700 per tonne FOB Turkish ports.
2. On April 13th scrap was offered at USD 430 per tonne as against USD 460 per tonne to USD 470 per tonne a week before CNF Turkish port. Turkey stopped buying and rebar started going down at USD 680 per tonne to USD 690 per tonne although billets remained strong
3. Today it has become easy to buy rebars at USD 620 per tonne to USD 630 per tonne FOB but buyers have vanished. Billet is reported under USD 600 per tonne and 2-3 scrap deals are heard at USD 400 CFR Turkey.
Thus, the ominous signs have appeared on the weekend setting tone for further correction on week opening.