Why are scrap prices increasing? Will the rise in prices continue?

The increase in the prices of imported scrap in Turkey continues at full speed. In the first 11 months of this year, Turkey imported approximately 19.7 million tons of scrap, a decrease of 12.8% compared to the same period last year. During this period, the import value was approximately US$9.3 billion, down 7% year-on-year.

According to analysts and market representatives, this situation led to an increase in US and European scrap, as the scrap yards of the mills remained empty and they started to make purchases.

In addition to this, the problems experienced in scrap collection due to winter conditions also appear as another reason. In addition to all these developments, analysts believe that the FED (US Central Bank) should keep the interest rate constant, however, it will be possible to observe the rally effect in commodities, which will support the increase in scrap prices.

There are also sharp increases in international scrap prices. According to statistics, in the first ten months of this year, Japan's scrap exports totaled 5.35 million tons. Among them, exports to South Korea remained basically flat y-o-y, while shipments to Taiwan and Vietnam Decelerated by 8.4% and 38.6% y-o-y, respectively.

In the first half of this year, scrap demand from South Korea and Taiwan was expected to remain at current levels, and Vietnam and China's steel and scrap demand were expected to be supported by government stimulus measures. Due to the eased zero Covid policy, the gradual recovery of China's steel demand has also sharply strengthened the market. The demand that will increase and the supply for demand has intensified the competition.

The overall overseas demand for Japan's scrap was expected to recover in 2023, but exports may be limited due to stronger domestic consumption and slower scrap production in Japan.

In short, the optimistic picture expected from the new year indicates a strengthening in demand all over the world, and the possibility that the supply will not be able to meet the demand due to weather oppositions continues to strengthen the scrap.