Turkish mills continued to buy scrap at higher levels Monday despite the increased raw material cost, meaning margins for finished steel ebbed away.
The US re-entered the market with a deal from a New Orleans source at $388/mt for 25,000 mt of HMS 1/2 80:20 and $401.50/mt for 20,000 mt of plate and structural scrap. As material from New Orleans is higher yielding than the East Coast, this deal is assessed to $384/mt on the Platts methodology for 80:20 CFR Turkey.
Elsewhere a deal for 25,000-30,000 mt of shredded scrap sourced from the UK was heard in the market at $395/mt. Supply of shred is very tight with so little material coming out of the US and so the premium over 80:20 for this deal could be as much as $10/mt.
Another cargo booked out of the Baltic was heard in the market at $385/mt for 27,000 mt of 80:20 and $395/mt for 8,000 mt of bonus. As a result of the above deals the daily Platts assessment moved up $1 to $385/mt.
The continually rising scrap price comes as Turkish exports of rebar were stable at $569/mt, meaning the spread between raw material and finished steel for the Turkish electric arc furnaces is down to just $184/mt. At this level the margins are very thin for producers and much of the market is questioning how long mills will be able to put up with the current situation.
"The outlook is definitely not optimistic. We have to see what is happening in the US with domestic prices there, but if the mills [Turkish] allow scrap prices to get up to $390/mt without ramping up rebar prices then they will be losing money," one European scrap merchant said.
