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Turkish ferrous scrap import prices may rise and remain supported through to September based on heavy disruption to European logistics and its effect on scrap supply to Turkey.
Northwest Europe is the largest overall ferrous scrap supplier to Turkey. Turkey has imported a combined 2.428mn t from the Netherlands, Germany and Belgium in the first six months of 2022, according to customs data.
Exporters in all three countries have been finding it very difficult to commit to existing cargo sales for August shipment and to make new sales for September shipment because their logistics have been severely disrupted by historic hot weather.
The European scrap supply system is highly dependent on inland river transportation. A lack of rainfall in central Europe through July and August means the River Rhine is experiencing historic low water levels that are requiring suppliers to cut the volumes of scrap they can load on barges.
Continental European scrap exporters have only been able to load a half or a third of the volume on a barge on the Rhine since mid-July compared with the typical 1,000-2,000t they were able to load in the early summer period, according to an Argus survey this week.
Barge costs from the Frankfurt area into Belgium and the Netherlands are also five times the price mid-summer than they were in early summer. Scrap transport by barge from very northern parts of Germany is less difficult because the smaller rivers allow for damming, but these smaller rivers transport far less volume into the large export terminals in northwest Europe than the Rhine does.
In addition to lower per-barge volumes, scrap exporters are finding it difficult to actually source barges because of strong competing demand from the coal and wheat industries. Limited gas supply in Europe means German power suppliers are increasing coal-fired power plants, which require delivery of large volumes of thermal coal via barge.
Continental European exporters have also experienced the typical summer slowdown in scrap arisings because sub-suppliers tend to take time away from collecting new material as they take holiday. Some exporters told Argus that scrap arisings were down 50pc in July compared with June. Dutch exporters increased HMS 1/2 dockside purchasing prices to €320/t ($330/t) early this week.
The combination of lower supply and transportation disruption in Europe looks likely to continue through the rest of August. The two-week weather forecast in west Germany shows that only one hour of rainfall will occur — on Monday next week — which signals that water levels and barge transportation will remain an issue for the foreseeable future.
argusmedia.com
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