Final Thoughts

CRU: Turkish Demand Raising Scrap Prices

Written by Aaron Kearney-Keaveny

The CRU metallics price indicator (CRUmpi) for March increased by 7.4% month-on-month to 357.7, the highest level since last June. The main developments have been in Turkey, where the tragic earthquake initially had a negative effect on scrap buying from the largest scrap importing country, though in the second half of February this quickly turned around. Meanwhile, supply is returning in key regions and will partially restrict the price rise from Turkey’s demand.

CRUTurkish Buying Boosts Prices Across Most Major Regions

The launch of large reconstruction projects in the affected regions of Turkey has boosted scrap purchases. We have also heard of there being a high level of speculative buying as this rise in demand is expected to grow further. This quickened the price rise, with the Turkish HMS 80:20 scrap import price rising by $32 per ton, to $450 per ton CFR over the past three weeks.

The surge in demand and restocking in Turkey also caused EU prices to rise, by ~$20 per ton. This has helped to support European scrap suppliers amid the poor domestic steel demand in the region. The construction sector, and therefore long products, have had particularly weak demand as of late.

Turkish scrap demand also impacted the US market with the new export opportunities resulting in much higher competition over the nation’s scrap, particularly for northeastern materials. Rapidly rising domestic steel prices and tight supply for both prime and obsolete scrap further added to the boost, and resulted in an increase in prices of $50–70 per ton MoM.

Southern and Eastern Asian markets also saw scrap prices rise as they compete over materials from the same suppliers as Turkish buyers. However, particularly in southern Asia, there are some key political and economic issues restricting the demand for steel, and therefore also scrap. Widespread political unrest and delays in public spending are hitting steel-consuming investments and projects. The rise in Bangladesh’s scrap price is threatened by buyer’s payment-related issues as Letters of Credit openings have been significantly delayed, due to a shortage on US dollars.

China is the exception to the rule that we have seen other major markets follow. Scrap prices remained steady as buyers held off from offering higher priced bids amid poor mill profitability and improving supply. This supply increase negated the market impact of scrap as the EAF utilization rates rapidly increase since CNY, moving up from 29% to 55% MoM.

Rises in Scrap and Steel Prices Also Boosting Ore-Based Metallics

The previously explained increase in scrap prices, as well as those for steel, has fed into the ore-based metallics markets, as more steelmakers are turning to pig iron as an alternative to scrap. CIS supply remains tight amid the war in Ukraine, though we are still hearing of some EU companies purchasing Russian pig iron while others maintain self-sanctioning. Power supply in Ukraine has improved recently, resulting in higher and exports. This, however, is far from a return to pre-war levels and risks to energy and transport infrastructure remain. Brazil pig iron prices rose by $30 per ton MoM to $555 per ton CFR NOLA due to the rise in global steel prices and strong demand from the US.

Outlook: Price Rise for Scrap and Ore-Based Metallics to Remain, but Not for Long

The rise in demand and prices is set to continue for the remainder of March, though it will be reversed soon after as supply improves. We expect supply to return faster than previous seasonal boosts as the elevated prices will incentivize more collection.

For ore-based metallics, we have heard of low inventories of pig iron which have been drawn down since the peak at the beginning of the war in Ukraine. We expect steelmakers to increasingly turn to pig iron to restock but also due to the smaller price gaps between this product and scrap. We expect price developments to largely follow scrap, with a continuation of rising prices in March before falling again with better metallics supply.

By CRU Research Analyst, Aaron Kearney-Keaveny

This article was originally published on March 16 by CRU, SMU’s parent company.

Request more information about this topic.

Learn more about CRU’s services at

Aaron Kearney-Keaveny

Read more from Aaron Kearney-Keaveny

Latest in Final Thoughts