Turkey could take delivery of its first cargo of Chinese steel scrap in the next few months, Mario Borsese, co-founder and managing partner at steel trader DP Trade, told S&P Global Platts Steel Markets Europe conference in Barcelona Tuesday.
He said Chinese traders were looking to move domestic material -- in strong supply after the induction furnace crackdown -- into large export markets, such as Turkey.
While much has been made of Chinese scrap availability, exports remain very low, although up massively on this time last year.
There have been teething problems given the embryonic nature of Chinese export flows, with buyers in Vietnam, for example, wanting different qualities to those being offered by traders.
Asked where scrap prices may go in the next few months, Jose Angel Rey, commercial director of steel producer Celsa Group, said they should decrease in the near future.
"If we compare scrap with iron ore, scrap should decrease, but it's clear it should have decreased already," he said.
Rafik Namir, Marketing & Intelligence, Business Steering at Maghreb Steel, said scrap would probably fall depending on final product pricing.
Turkish mills had been comfortable paying scrap prices of around $270-$275/mt CFR as they could sell rebar domestically at a reasonable price, but this demand had moderated now, Angel Rey said.
Product exports into Turkey were also a growing phenomenon, he said, with two Italian wire rod cargoes arriving into Turkey this month alone.
"This new increase in demand in Turkey could be an opportunity, maybe we will see more cargoes [into Turkey] from Europe."
Turkish domestic pricing has been supported by brisk demand at home of late, despite export buying being fairly quiet.
At the same time, European rebar prices have been under pressure from large stocks, particularly at quaysides; material destined for Algeria has been delayed by the issues over import licenses.
Angel Rey said "we can forget about Algeria" for the next few years as the government wanted to prevent capital from leaving the country.
Asked about rising domestic supply in the Middle East and North Africa, he said it would be an issue for southern European mills that had typically exported into the region.
Spain had shrunk from a 6 million mt rebar market at its peak to 1 million mt, but Celsa was trying to avoid exporting as much as possible, he said.
Spain has rationalized its longs capacity with the closure of two mills, and Celsa was operating around 65-70% of capacity.
Spanish steel demand was starting to tick up, albeit from a low level, led by residential construction.
Permits for new homes were likely to double to 80,000 this year, but this was still substantially below the post-crisis peak of 800,000.
He said European steel demand could increase up to 3-4% next year, and that the scenario beyond them was "brilliant" as global gross domestic product looked set to rise over 3%.
When GDP rises above this level, steel demand typically increases at a brisk rate too, he said.
