Scrap suppliers have significantly reduced their prices to Turkey against the backdrop of the weakness of demand from Turkish steel producers since December. On January 23, the price of HMS I/II 80:20 scrap was at $255/mt CFR in an ex-US deal concluded in Turkey. The fact that US-based scrap suppliers have taken the lead in reducing prices to this level has caused surprise in the Turkish market.
Weak demand for scrap in Turkey - the world's biggest scrap importing country - has increased the pressure on many overseas scrap suppliers to conclude sales, since it has been a while since they have concluded new deals to their most important export market. Given the downward movement of the local US scrap market in January due to the lack of export sales, US-based scrap suppliers, who had said they could not reduce their prices below $300/mt CFR only a couple of weeks ago, have sharply reduced their offers to Turkey. Also, Turkish steel producers are experiencing serious difficulties in terms of their finished steel sales both in their domestic and export markets and they have been revising their price ideas for import scrap downwards after every deal. After the ex-US deal in Turkey concluded last week for HMS I/II 80:20 scrap at $265/mt CFR, Turkish mills' price idea for import scrap decreased to $250/mt CFR. Market sources state that most scrap suppliers are finding it difficult to reduce their offers to Turkey to this price level, which is almost equal to the level of ex-Black Sea scrap quotations. On the other hand, in particular given that US-based suppliers have taken the lead in reducing scrap prices, it is now impossible for suppliers in Europe and in the Baltic region to offer higher scrap prices to Turkey.
Meanwhile, the reaction of the finished steel markets to this sharp decrease in scrap quotations will play a significant role in deciding the future trends of the finished steel and scrap markets.