Global scrap prices are feeling the pinch of a shaky steel market. In early March, prices dropped in major markets like the EU and US, largely due to a decline in demand from key players.
Turkey Pulls Back on Purchases
Turkish steelmakers, a major force in the scrap market, have halted purchases since February. This decision stemmed from a drop in sales of finished steel products, partly caused by a decline in Asian demand. Additionally, Turkish producers anticipated a post-holiday rebound in China and wanted to assess future market trends before resuming purchases. This created a temporary oversupply of scrap, pushing prices down.
Weak Demand Across the Board
The weakness wasn’t limited to exports. Domestic demand in Turkey also remained sluggish, further pressuring scrap prices. Local steelmakers, wary of low steel sales, are hesitant to buy large quantities of raw materials. Combined with the Ramadan holiday period (March 10-April 9) that typically sees production slowdowns, scrap prices in Turkey are expected to stay low or even decline further in the short term.
Global Market Feels the Ripple Effects
The ripples from Turkey’s market reached other regions. The EU scrap market, though experiencing some volatility, has seen a slight increase in prices compared to the year’s beginning. However, demand from domestic steelmakers and export sales have been low due to the global slowdown. This wait-and-see approach, coupled with falling scrap prices in the US, has dampened hopes of any price rise in March for the EU market.
US Prices Take a Tumble
The US East Coast saw a significant price drop for scrap metal in early March. This plunge reflects declining steel prices and the impact of the Turkish market. The long pause in purchases by Turkish producers created an oversupply, forcing US suppliers to lower their prices considerably. Forecasts predict further decline in the US market due to sluggish trade activity, with potential drops of $20-50 per ton.
Looking Ahead: A Mixed Outlook
The future of scrap prices remains uncertain. While some hope for seasonal improvement in steel demand to support the market, a short-term decline seems likely across most regions. Fastmarkets predicts global scrap prices to face pressure due to slowing steel demand. The US market might see some stabilization, while the EU could experience a slight decline, particularly in the construction sector. In Turkey, reconstruction efforts following the earthquake could create a mid-term boost in steel demand, potentially leading to increased scrap requirements.
Source gmk.center
