The European long products market is looking carefully at developments in Turkish scrap prices, but various large producers believe the sector is not preparing for price drops.
A source within one of Europe’s largest suppliers notes that a correction in scrap levels is normal after a rally of the size seen towards the end of last year. EU prices for finished long products are nevertheless not expected to correct in Q1, he adds.
“Fundamentals in the longs market are still good, mainly driven by demand; I don’t see why prices should drop,” the source tells Kallanish.
In some specific segments, such as wire rod, there is still a clear feeling of shortage of supply in the market, he continues. His company is registering two-digit-level-higher order books compared with January 2020, thereby confirming the good demand momentum in the sector.
“I can’t say that prices will continue their upward rally at the moment, of course, but what I can be sure of is that a downward correction for longs prices does not seem to be in sight,” he comments. EU import quotas for Turkish longs are not being filled as quickly as last year, confirming that Turkish mills are not massively enticed by the European market at present, he adds. These mills continue to have good order books filled by demand from other markets.
The first effects of the Turkish scrap price correction were seen this week in the Italian market, where prices dropped somewhat (see Kallanish passim). Nevertheless, domestic rebar and longs mills are still holding their prices firm.