Turkey Leads Ferrous Scrap Market
For a prolonged period, Turkey has been the top global importer of ferrous scrap. As a result, when the industry is running smoothly, scrap prices in North America and Europe may see an increase.
Though the Turkish Economic Confidence Index may appear to have little relevance for scrap dealers in the United States, it is worth noting that January saw its figure rise to 99.3, with manufacturing at 103.4. This could create a ripple effect regarding scale prices and processor perceptions.
An Upward Shift
For several weeks, Davis Index, a metal information and pricing service, has noticed a climbing trend in ferrous scrap export prices to Turkey. As per the organization’s report, U.S. sellers are optimistic with proposals and seeking higher costs for the product.
Despite the initial confidence, Davis Index cautions it may not last long due to many orders for March deliveries already being placed.
Davis Index further reports that the price of transporting heavy melting steel (HMS) bulk cargo from New York to Turkey has risen significantly over a short period of time. From January 20th, the average price per ton was $378.85 and now, only 11 days later, it stands at $394.94, an increase of 4.25%.
A Potential Concern
In late January, Argus released an analysis which posed doubts about the sustainability of the growing market for semi-finished steel and scrap. The report pointed out that suppliers had taken advantage of discerning buyers restocking at the beginning of 2021, resulting in higher prices.
Even though more electric arc furnace mills are becoming operational in America, the effect of this could be dampened by “stubbornly low mill utilization rates,” according to Argus.
AISI Weighs In
The American Iron and Steel Institute (AISI) calculated that over the past week, the capacity utilization rate of U.S. steel mills was 72.5 percent. This is a slight improvement from January’s initial figure of 71.3 percent.
Despite a 6.6 percent drop in production, the American Iron and Steel Institute (AISI) reports that the week ending January 21, 2023 saw 1.62 million tons of steel produced domestically. Still well below output from early 2022, when it reached 1.735 million tons. At mid-January 2022, the mill capacity rate was recorded at 79.8 percent.
AISI also reported that in mid-January the southern part of the United States had the highest raw steel output with 681,000 tons produced. The Great Lakes region followed closely behind with 542,000 tons created, while the Midwest yielded 202,000 tons, and the Northeast 127,000. Lastly, the Western region accounted for 68,000 tons.
Looking to the Future
Following a continuous decrease in ferrous scrap prices and reduced demand from steel makers through 2022, it appears that the market is now on the upswing. Recent weeks have seen ferrous scrap prices experiencing a resurgence, undoubtedly good news for both scrap generators and processors.
The potential of higher earnings has made scrap generators and shippers in Turkey highly enthusiastic. To keep this momentum going, however, it may have to be sustained over a period of several months. “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,” Michael Fitzgerald of Argus writes.
