Last week, Turkish steel mills had maintained a wait-and-see stance regarding the future trend of the steel markets and halted their import scrap purchases ahead of the referendum on April 16 and also given the declines recorded in Chinese semi-finished and finished steel export prices. Although the referendum is now over, Turkish steelmakers' demand for import scrap has remained at low levels in the current week.
On April 17, the first workday after the referendum, demand in the local Turkish finished steel market failed to improve despite the decreases recorded in domestic finished steel prices. With the lack of strong demand for Turkish steel also from international buyers and given the negative trend of Chinese steel prices, Turkish steel mills are continuing to postpone their import scrap purchases. Meanwhile, iron ore prices in China have declined by a total of 31 percent over the past month - a short period for such a sharp decline - due to the high inventory levels at Chinese ports, and are at $62.5/mt CFR China as of today, April 18. China's steel production capacity utilization rate increased in March despite high semi-finished and finished steel inventories, while the country's export volume in the first quarter declined by 25 percent year on year. As a result, Chinese steel suppliers are still maintaining a more aggressive stance regarding exports and continue to reduce their steel export quotations. This has raised concerns in the global steel market and constitutes a negative factor for Turkish producers' export sales.
As Turkish steel producers are unwilling to plan their import scrap purchases before seeing a clearer trend in their finished steel markets, demand for import scrap in Turkey is still weak, causing a decline in the number of scrap suppliers giving offers to Turkey, though suppliers do have decent scrap inventories. Since the weakness of demand and the decreases in Chinese steel prices have put pressure on Turkish steel mills' finished steel export quotations, Turkish mills are expected to seek lower prices than in their previous deals for HMS I/II 80:20 scrap which were concluded at $265-267/mt CFR.