Demand for scrap is likely to remain high in Turkey in Q1 2020 despite the market being forced to look further ashore for shipments due to limited supply from the Black Sea region.
According to the latest Irepas outlook, the lack of supply from the Black sea region—due to the implementation of Russian quotas in September-December 2019—has forced Turkish mills to shift their focus to shipments from the US and Europe. Davis Index has learnt that while there have been no more quotas from Russia in Jan, there have been discussions on exporting scrap through exchange from April 2020.
The shortage of ferrous scrap in some areas pushed prices up to above $300/mt cfr in the Turkish import market at the end of 2019, but a correction is expected shortly as the prices for reinforced bars remains flat at $450/mt with no sign that prices will get any better.
However, the Irepas data indicated global long steel products market is in a better shape, after the Phase One trade deal between US and China was announced. Developments in China remain positive for the global steel industry, according to Irepas, as the country continues to stimulate its economy, providing a boost to the steel industry.
Steel exports from China continue to decline as the country plans to use its domestic scrap supply for its own production. The positive news from China will continue to support steel prices, while expectations of a strong Chinese currency will have a positive impact on commodity prices.
PMI figures in Europe have rebounded with manufacturing looking to recoup some of the losses incurred during the fall of 2019.