Last week the pricing trend of scrap in Turkey, iron ore in China and semis in the Black Sea diverged significantly.

Iron ore surpassed the level of $70/tonne cfr Qingdao for the first time since March this year. The recovery was supported mainly by firm sentiment in finished steel prices in China. It was also underpinned by the confirmation that the limitations on output for Chinese mills in the winter period will be weaker than last year. Market observers are still monitoring the situation of the output restrictions in China. This is to make sure on the one hand that the steel market is not oversupplied, but at the same time that iron ore demand remains strong from mills.

While this year’s record level of almost $80/t cfr Qingdao remains distant, the fourth quarter has begun with firm prices, well above those registered in Q2 and Q3 this year.

Meanwhile scrap in Turkey has returned steadily to $330/t cfr Turkey, after having fallen previously to as low as $300/t cfr. Last week the market held despite the continued difficulty of Turkish mills to hold price levels in the rebar export markets. It remains difficult to say if Turkish mills will be soon forced to force down scrap levels to recover some lost margins in their longs sales. For the moment however, the scrap market is benefitting from stronger-than-expected sentiment.