Turkish buyers likely to lift ferrous market

While steel output in the United States slowly recovers from its COVID-19-related impacts, electric arc furnace (EAF) steel mills in Turkey, Vietnam and elsewhere look poised to put some upward price pressure on the U.S. ferrous scrap market.

Figures for July 2020 collected by the Brussels-based World Steel Association show steel output in Turkey rose by 7.4 percent compared with the July 2019 figure, and year to date the nation’s output has declined by just 2.4 percent. Vietnam is another scrap importing nation exhibiting healthy steel production in 2020, with the nation’s mills showing an 8.4 percent increase in year-to-date output.

Information gathered by London-based Kallanish Commodities indicates that in mid- and late August, Turkish mills and their buying agents have been active in the North American, European and Russian scrap markets, seeking scrap feedstock.

The Turkish rebar mills have been selling their output not only to their typical domestic and Middle East customers but also to buyers as far away as Hong Kong and Singapore, according to Kallanish.

The full order books of the Turkish mills have resulted in August purchases of heavy melting steel (HMS) shipments from exporters in Russia, Poland and the U.S.

According to Kallanish, one buyer in Turkey paid $287.50 per metric ton CFR (cost and freight) for the U.S. shipment. The early August Fastmarkets AMM U.S. East Coast Export Index price was $260 per metric ton.

Turkish sources contacted by Kallanish referred to expectations of a double-digit number of additional bulk vessel scrap purchases in September, and that U.S. sellers already are asking “higher prices” than the $287.50 figure.

Kallanish also is reporting upward price pressure in the East Asia market, though much of that activity pertains to Vietnamese and Japanese mills competing for Japanese ferrous scrap.

However, the commodity news service says Vietnamese EAF mills are buying bulk cargoes in August, paying up to $310 CFR for Australian HMS scrap and $301 for a bulk shipment from the U.S. Bids for containerized ferrous scrap are lower, says Kallanish, with Vietnamese mills paying between $260 and $270 per metric ton for containerized HMS scrap from the U.S.