Steel scrap prices on the east coast USA will be impacted by the recent purchase of scrap by the Turkish steel mills. Ultimately, flat rolled steel prices will be impacted as wellas we wait to see what the scrap prices will be for the month of July.

SMU was stopped in the hallway during some downtime of the Steel Success Strategy conference by one of the scrap dealers we communicate with on the east coast. The expression on his face was much different than 24 hours earlier when we discussed the potential for July scrap numbers to be down significantly.

He told me he had learned the Turkish steel mills had just booked a number of cargos from the United States at a number around $315 per long ton which is $10 per long ton higher than a smaller order booked approximately one week ago.

A second source told us the actual purchase by the Turkish mills was for 22 cargos of which 13 were coming from Europe and the remaining 9 cargos were coming out of the United States. Because of the Muslim Holiday of Ramadan the scrap purchased is projected to last the Turkish mills until September (or they would not be buying again until September).

We spoke with one of the analysts with whom we have a good relationship and he told SMU prices for prime grades of scrap are out of line with historical norms and there should be a correction of “around $75 per ton.”

Our east coast scrap dealer told us the expectation with the purchase by the Turkish mills is for grades other than prime to be down by approximately $30 per long ton. Prime grades of scrap should adjust more than HMS and shred. However, he warned SMU and we warn our readers the negotiations with the domestic mill industry for the month of July have not begun and a lot can happen (up or down) in the next two weeks.

Prices in line with New LME Billet Contract Pricing

We received the following email from Joseph Reinmann, CEO of Kataman Metals and a contributing writer for Steel Market Update. You may recall Joe wrote a piece last Thursday regarding the relationship between billet and scrap prices (or vice versa). Here is what he had to say today:

“LME billet pretty proving to be a pretty good barometer:

Scrap east coast $315 (as per conversation yesterday) + $40 freight +$80 conversion = $435.

$435 is exactly where billet is trading today .. up $25 to $30 from last week.. maybe billet was a little oversold when I wrote my piece last week.”

Steel Market Update follows flat rolled steel prices, scrap prices, LME Billet prices and hot rolled futures contract pricing on the CME/NYMEX exchange. We offer a newsletter to our members which is published three times per week. You can register for a 4-week free trial to our newsletter on our website - www.steelmarketupdate.com