Ferrous scrap exporters in Western Europe have broken through customer resistance in major market Turkey and gained $10 a metric ton on orders for November.
The move, which dealers said would lead to an increase in prices charged to other export markets, has been fuelled by a pick-up in demand from Turkish buyers and by a sharp rise in freight rates, exporters said on Thursday.
"There has been a poker game between Turkish buyers and European sellers in the last two weeks," said one exporter in the Netherlands.
"The Turks came bidding at extremely low prices but as demand in Europe is good and (scrap) availability is not, we could afford to wait. We knew they would crack," he added.
Business is now being done at $115 a metric ton for shredded scrap and $104/105 a metric ton for No. 1 heavy melting scrap, both on an fob basis. "The Turks were offering $105 a metric ton FOB (for shredded scrap) two weeks ago," the exporter said.
Turkey's steel industry relies heavily on ferrous scrap imports for furnace feed and buys around seven million metric tons a year. Because the country produces little scrap to supply its powerful steel industry, Turkey is the world's second largest steel scrap importer.
Turkish industry typically sources ferrous scrap from Russia and Ukraine, but falling collection rates in these countries and rising shipping costs have seen export volumes dwindle.
Russia's exports, for example, have fallen by 12.9 percent to 4.6 million metric tons in the first nine months of 2002 compared with the same period last year, according to Russian traders.
Shrinking export volumes have been further squeezed by climbing freight rates due to fierce competition for vessels from grain exporters.
Shipping costs from Russia and Ukraine, where grain exports to Europe have rocketed in anticipation of restrictive action from Brussels, have reached $26/27 a metric ton from about $16 a metric ton in June.
High demand for shipping vessels has also affected European scrap exporters, who have had to turn down requests for shredded scrap from buyers in India.
Freight rates to India have effectively doubled to $33/34 a metric ton in the last couple of months, said exporters.
"For all the hassle and expense to India we're better off selling to Turkey or Europe until the freight (cost) comes down," said another exporter. Reuters