Turkish mills have been forced to pay above $500/tonne cfr for scrap despite trying to keep their imported scrap buying prices below this threshold, Kallanish notes.
A long steel producer in western Turkey has concluded a scrap booking from the UK that consists of 18,000 tonnes of shredded at $519/t cfr and 6,000t of HMS 1&2 80:20 at $499/t cfr Turkey. Shipment is in the second half of June.
Although HMS 1&2 80:20 appears at $499/t cfr in this booking, the unusual $20/t premium over shredded indicates that HMS 1&2 80:20 is actually valued at above $500/t cfr.
The historical difference between these two grades is $5/t. There have been occasions when it has widened to up to $15/t, when shredded supply is tight and demand is strong. The $20/t spread is even higher than the typical differential between HMS 1&2 80:20 and P&S grade scrap, which is $10/t.
Turkish mills’ current demand for shredded scrap is seen to be strong. These traditional price spreads are expected to vary due to imbalances in supply and demand.