Rusmet.ru, Victor Tarnavskiy/ Turkish companies start to return to scrap market after a long pause. According the traders several deals were concluded in recent days. Usually such a rally causes prices boost. However, the prices keep falling. The US HMS № 1&2 (80:20) is offered at about $350 per ton CFR, but there is almost no demand for this material. Turkish companies keep buying scrap in Europe and CIS at $330-340 per ton CFR or in Middle East, where the prices can be lower than $320 per ton CFR. According to some analysts scrap prices in June can fall to $300 per ton CFR Turkey, although earlier almost all participants of the market expected some increase of the prices in current month due to buying activity growth.
The problem is excessive scrap (especially European) in the market. The traders hurry to buy out the stockpiles. They will not have another possibility till autumn. Today Turkish steel mills conclude agreements for July, since in August Ramadan starts. During Ramadan the demand for steel falls. Some manufacturers reduced steel output due to possible difficulties with sales in the nearest months. Thus their need in raw materials also fell.
The situation in European scrap market is not good as well. Some regional long products manufacturers work on 50% capacities load. There is demand for scrap. The traders say that they focus on the stockpiles reduction. At the same time there is the seasonal peak of scrap collecting. Low euro to US dollar rate furthers export from Europe.
In East Asia market scrap price decrease as well. Chinese companies still do not express activity; other consumers continue to force down the prices. Container shipments of the US HMS № 1 to Taiwan are provided at $370-380 per ton CFR. Bulk scrap price for fell to less than $400 per ton CFR. Indian buyers wholly moved to cheaper European scrap and refused to buy expensive US material. Japanese exporters also have to decrease their prices.
At the same time the US companies bear small losses in domestic market. The prices for main kinds of scrap in early June decreased by $5-15 per ton only. Many US companies bought small lots of scrap in April-May. Now they started to refill the stockpiles for summer. That is why the traders can partially cover the losses from export volumes decrease by means of domestic sales.
Obviously, in summer excessive scrap supply in global market will remain. Steel manufacturers which allowed excessive production in March-April, have to cut the output and to decrease the costs. That is why the demand for raw materials is likely to keep weak in the nearest months. The rally in Middle East long products market only can somewhat increase the prices, if it happens in the nearest two or three weeks.
Nevertheless the prospects of global scrap market for the autumn looks rather optimistic. Today the market switches to the minimal consumption volumes and costs. Significant increase of the demand in one of the key market (USA, Turkey, Far East, and Europe) will at once cause the shortage and the prices jump. Besides, there is a possibility of Chinese import former volumes recovery. Under the conditions of iron ore shortage local steel manufacturers turn to scrap. This is supported by the government, since the usage of secondary materials furthers to environment protection.