Turkish Scrap prices advance nearly 14% during October

TURKEY November 11 2016 4:33 PM
ANKARA (Scrap Register): Turkish scrap prices experienced a near 14% increase over October, ending the month at $239 a ton. The price rise came on the back of the incredible spike seen in coking coal prices, which saw a further 21% rise over the month to reach $257.7 a ton, said the Steel Index.

HMS #1&2 80:20 scrap import prices experienced a small increase in the first week of the month as premium US East Coast material destined for Turkey closed around the $215 a ton level. 

Prices continued to rise in the second week as they broke through the $220 a ton mark. The scrap market continued to see trades being booked, despite macroeconomic uncertainty surrounding the Turkish market, with the lira dropping to an alltime low against the greenback.

As scrap prices continued to rise, so too did the interest in scrap futures. On October 19 the largest single day trade on the contract was done on the London Metal Exchange (LME), with 3,800 lots traded. This is equivalent to 38,000 mt of trade, which in turn means that participants are now able to hedge a full cargo size - typically 37,000 mt on a Handy or Handymax vessel.

The back-end of October saw Turkish scrap prices reach a five month high. The sustained price increase came on the back of significant coking coal price rises, as well rises in iron ore, which in turn increased the competitiveness of EAF-based steel producers, and thus increased demand for scrap. 

Moreover, rises in rebar prices and Black Sea export billet prices, which saw increases in excess of 10%, also filtered through to higher scrap prices.

S&P Global Platts reported that US sellers to Turkey were targeting $250 a ton, however this was dependent on how aggressive domestic settlements would be in November before committing material for December shipments.

For October, the LME scrap futures contract (cash-settled, basis TSI) saw record volumes of trading with a total of 147,380 mt cleared on the bourse. This is up over 318% on September volumes, and accounts for 42% of total volume traded since the launch of the contract in late November 2015.