Miller on Scrap Exports: Muted Turkish activity

Freight rates have remained high in the US and Northern Europe, and there has been little or no activity in the Mediterranean region since our last export update on March 10. At that time, SMU reported a sale to Turkey at the beginning of March from Northern Europe at $363.50 per metric ton (mt) CFR for HMS 80/20.

The last US cargo was at $374/mt CFR. Since then, there have been no reports of additional cargoes transacted that can be confirmed. It is the holy month of Ramadan and activity general slows during this time. However, many traders are quite surprised about the dearth in purchases considering the continuing needs of the Turkish steel industry.

In general, things are a real mess in the export markets with freight rates being unpredictable and trade flows being disrupted. An executive in the export trade told SMU, “It’s really difficult for everyone to make anything work at the moment.”

Freight woes

The freight from both Northern Europe and North America has remained very high, mainly caused by the war in Iran. The freight rates from the US East Coast have been quoted at just under $50/mt for cargoes destined for Turkey. This is up from freights in the mid-$30s earlier this year. The increased cost of fuel and insurance, not to mention availability of vessels, are the main culprits.

Elevated tags

Another reason for the hesitation by Turkish buyers is the prices of available scrap cargoes in the countries that are traditional suppliers have remained elevated. Even though the spring month of April is upon us, the price levels in those domestic markets have not yet shown their seasonal weakness after hard winters. Turkish steelmakers could be waiting to see if April scrap settlements fall in those countries resulting in lowered export offers. This would involve waiting to order for another two weeks.

According to sources in the export trade, scrap offers from Northern Europe and the UK are in the area of $380/mt CFR for HMS 80/20. Offers from the US and Canada are pegged at $385-390/mt for the same grade. So far, there have been no reported activity at these levels.

Export traders

SMU contacted two export traders. Each speculated activity would start after this weekend when Ramadan concludes. It still will be difficult for Turkey to accept offers at this level without a fight. In the recent past, Turkey has been able to take advantage of weak billet prices from the Far East, Russia, and Iran, but these sources have either disappeared or increased in price. There has been some upward movement in rebar prices, and this could allow for buying to resume at some increased level.

Stephen Miller

Stephen Miller started his career in the scrap metal industry in 1978 at Luria Brothers in Cleveland. Over the last 40-plus years, he has worked in all capacities in the trading business. He has had positions in both domestic and international scrap trading. In addition to scrap, Miller was at the forefront of the pig iron trade and established a pig iron distribution company under the name of Ferrosource, Inc. Most recently, Miller has concentrated on the scrap export market and regularly does consulting for several companies in the industry.