Ferrous scrap prices have crashed over the past five weeks, finally coming more in line with weakened steel prices, which have fallen by a larger magnitude since the middle of 2018. Using CFR Turkey scrap as a gauge, spot prices of HMS I/II 80:20 have fallen $136.5/mt from their peak in March 2018 as of September 12. Over the same period, rebar prices on an FOB Turkey basis have fallen by a larger $172.5/mt, S&P Global Platts data show. While in percentage terms, prices of scrap have fallen 36%, compared with 29% for rebar, market participants typically view scrap and steel prices in absolute rather than relative terms, as the yield ratio of steel per ton of scrap is nearly one-to-one. But in comparison with steel billet prices on an FOB Black Sea basis, which saw prices fall $186/mt (or 34%) since the March 2018 high, the fall in scrap prices still lags by a wide $50/mt, according to Platts data. This would translate to tighter margins for the Turkish steel industry, floating at an average of $166/mt thus far this year through to September 12, a far cry from the 2018 average of $195/mt – and this despite the… continue reading
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Source: CTRM Center