During the week ending September 4, with the start of purchases for October deliveries two import scrap deals have been heard in Turkey, from the Baltic region and Europe. The main reason for the limited number of deals was Turkish producers' determination to wait for attractive discounts.
With the deals in question, scrap prices started to trend down, while it became clear in an ex-US scrap deal to Turkey concluded on September 12 that Turkish producers were achieving their desired discounts. The ex-US HMS I/II 80:20 scrap price for Turkey in the deal in question was $375/mt CFR, indicating a decrease of $8-10/mt compared to the previous transaction. No new scrap deal has been heard since the beginning of the current week. However, Turkish producers have accelerated negotiations with scrap dealers in the light of the new softer price and new transactions for October shipments are expected to be heard soon.
At the beginning of August, some Ukrainian billet producers had stopped their export sales due to the conflict in their country, resulting in tightness of supply in the Turkish import billet market. Therefore, Turkish producers were forced to use scrap for production, which provided support for scrap prices. Lately, however, Chinese billet producers have started to give offers to Turkey and so the tightness of billet supply has come to a halt. With the significantly cheaper Chinese billet offers, billets have once again become a more attractive option as a raw material for production instead of scrap, and this development has raised concerns among scrap dealers. Additionally, Turkish rebar producers have decreased their offers to the Middle East which is their main export market, in order to be able to compete with the more attractive Chinese offers.
The Chinese presence in both the local Turkish market and in Turkey's export markets has increased the downward pressure on scrap prices, while scrap prices are expected to soften further in the new deals expected to be concluded in the coming days.