TURKEY June 13 2016 2:56 PM
ANKARA (Scrap Register): The May monthly average of the daily benchmark index for Turkish imports of HMS #1&2 80:20 rose to $308.70 a ton CFR Iskenderun port, up 12.59% month-on-month from April.
The LME scrap futures contract had its best volume month to date. 2,200 lots traded during May, 43% up on the previous high. Volatility in Turkish scrap prices reduced from that of March and April, with the index reaching a 563 day high, then retreating 13.2% over the course of the month.
Early May saw the benchmark index reach a peak of $326 a ton CFR Iskenderun port, its highest level since October 2014. This was to the surprise of many participants as Chinese billet prices were falling at the same time, which historically is an indication that scrap would follow suit.
Market participants were continuously watching the Chinese steel market as many were anticipating a fall in prices, which in turn would affect the scrap market. This uncertainty in the market discouraged trading activity with participants opting to take a wait-and-see approach.
Price falls began in the third week of May as bids and offers at much lower levels than the last booked cargo began to reach the market. Moreover, the strengthening of the US dollar versus the lira, as well as the scrap/iron ore ratio hitting six year highs, put further pressure on scrap prices.
No cargoes were booked by the end of May as market participants were uncertain as to where Turkish prices would begin to level out. Hence many expected price stability to return after Ramadan, which ends in the first week of July.
However, with no trading activity for over four weeks, it was believed that inventory levels must be running low at mills, hence resulting in trading potentially resuming earlier than initially expected.
