Rebound in Turkey has ferrous market optimistic

Turkey for many years has 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 could experience upward pressure.

Thus, while the monthly Turkish Economic Confidence Index might seem of marginal interest to a scrap dealer in the U.S., the fact that it rose in January to 99.3—with the manufacturing sector leading the way (103.4)—already could 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,” Davis Index says.

That optimism could have limited momentum, Davis Index adds, noting 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 Jan. 20 to $394.94 per metric ton 11 days later, according Davis Index. representing 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 semifinished steel and scrap “have benefited from restocking at the beginning of the year that has supported higher prices,” the report says.

Although new electric arc furnace mill capacity is coming online in the United States, the significance of that could be muted by “stubbornly low mill utilization rates,” Argus adds.

For scrap generators and shippers who like higher prices, the optimism in Turkey could 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.