The Turkish mills have been back in the U.S. scrap market over the past week purchasing 13-16 cargos (about 600,000 metric tons) of shredded and #1 HMS. One of our sources on the East Coast told SMU:
“The Turks are back in the market, yes. They booked a bunch of cargos from Europe and the US East Coast that were reported earlier in the week. Prices were in the $375-$380 range for shred cfr Turkey, and $370 for 80/20 (translation w approx $45 to load and ship about $330 for shred and $325 for #1 steel). The domestic East Coast shred prices for Oct was comparable and about $15 higher than Oct #1 prices. “
The east coast scrap dealers are feeling a little better about their plight having the Turkish mills back in the market. At the beginning of October many dealers were of the opinion the best case scenario for November would be a sideways move. Sentiment is changing. As one dealer put it to SMU on Friday, “If it weren’t for the Turks – and the Koreans out west – I don’t think it [prices] would be going up [in November].”
The rumor is scrap prices on the east coast will move higher by $10-$20 per long ton in November. “However,” one dealer told us, “November is still a couple of weeks away and a lot can happen in a couple weeks.”
One source told SMU they will need all of October to fill their order book. “I will have no over-hang going into November,” he told us. Dealers in the east are raising their buying prices which are increasing competition regarding scrap collection. What is not known is if the higher dealer buy prices are a result of trying to fill existing orders for October or to build inventory for November.
Dealers know the trend for scrap prices is similar to flat rolled steel pricing – the numbers tend to rise at the first of the year. So, many yards will take a hiatus and not sell scrap in November and December and hold back waiting for the higher prices.
In the Midwest, we are hearing a similar story as the east coast, “John, am hearing today of up $20 or maybe even up $30 for November. Have heard that several mills did not buy enough scrap in October and are still making calls which is making dealers bullish. I also hear that scrap shipments to the mills is behind as dealers flows must not be great. Lastly I hear that a few mills are concerned about their low levels of scrap inventories heading into the start of the winter months.”
A large nation-wide dealer told SMU late last week, “We’re still seeing reasonable flows throughout the domestic channels, however, with continuing demand for shreds and cut scrap from the export docks, prices will remain firm. Other key components remain, including the weaker dollar and soft deep sea freights, both of which contribute to make the US market “the pond of choice to fish in” for global consumers.“