Rebound in Turkey has ferrous market optimistic
Turkey has for many years running been the world’s leading importer of ferrous scrap, meaning when its steel industry is humming, scrap prices in much of North America and Europe may experience upward pressure.
Thus, while the monthly Turkish Economic Confidence Index may seem of marginal interest to a scrap dealer in Pittsburgh or Detroit, the fact that it rose in January to 99.3—with the manufacturing sector leading the way (103.4)—may already be producing ripple effects on scale prices and processor sentiment.
Metals information and pricing service Davis Index has for several weeks been characterizing ferrous scrap export prices to Turkey as trending up gradually. “U.S. sellers are placing bullish offers and seeking higher prices,” the news service writes on February 1.
That optimism may have limited momentum, Davis Index also reports, saying orders for March deliveries largely have been placed.
In the meantime, heavy melting steel (HMS) bulk cargo prices from New York to Turkey have risen from an average of $378.85 per ton back on January 20 to $394.94 per metric ton 11 days later, according to the pricing information service. That represents about a 4.25 percent increase in less than two weeks.
A late January writeup by Argus also questions the strength of the current upward arc. Sellers of both semi-finished steel and scrap “have benefited from restocking at the beginning of the year that has supported higher prices,” writes the news service.
Although new electric arc furnace (EAF) mill capacity is coming online in the United States, the significance of that could be muted by “stubbornly low mill utilization rates,” adds Argus.
For scrap generators and shippers who like higher prices, the optimism in Turkey may need to sustain itself for several months running. “Domestic steelmakers should find some additional support [for low scrap prices] by less competitive import pricing, as global markets have followed a similar [mill capacity] trajectory to the U.S. since November of last year,” writes Michael Fitzgerald of Argus.
