Since it has been difficult for Turkish steel producers to conclude new
scrap deals at their targeted price levels, only a very small number of import
scrap deals have been heard in
Turkey, while
scrap suppliers' offers to the country have moved up despite the weakness of demand.
Last week, domestic
scrap prices for the December buy cycle in the US increased by $41-51/mt, depending on grade and location, due to demand being higher than supply and given the higher purchase prices of US-based
scrap exporters as they sought to buy in inventories to meet previously concluded
scrap export orders. In addition to higher domestic
scrap quotations, freight costs have also increased further in the US, causing US-based
scrap suppliers' price ideas for
Turkey to rise even above $290/mt CFR.
Several European steel producers have slowed their
scrap purchase activities due to the approaching holiday season, as they want to avoid high inventories entering the new fiscal year. European
scrap suppliers are expecting domestic
scrap prices to increase on the back of the foreseen revival of demand after the New Year holiday. As a result, they are in no rush to conclude new
scrap sales to
Turkey and they want to avoid reductions in European
scrap export offers since ex-US
scrap prices are currently moving on a rising trend. However, a limited number of ex-
Europe scrap deals has been heard in
Turkey in past weeks, with some European suppliers having preferred to meet Turkish steel mills' targeted prices, due to the advantageous euro-US dollar exchange rate and as they do not want to face the risk of high inventories entering the new fiscal year.
Meanwhile, it is observed that
scrap suppliers in the Baltic region are unwilling to accept HMS I/II 80:20
scrap prices below $285/mt CFR due to higher freight costs. Also, suppliers in the Black Sea region have increased their prices above $265/mt CFR since finding ships has become harder.
The main reason for Turkish steelmakers' decision to postpone
scrap purchases is found in the difficulties they are facing in their finished steel sales. Turkish steel producers are exerting downward pressure on import
scrap quotations because in most markets there exists similar pressure on their finished steel offer prices which are in the range of $422-475/mt FOB on actual weight basis, while only sales below $430/mt FOB on actual weight basis have been heard recently. Meanwhile, domestic demand for finished steel in
Turkey has remained sluggish and import billet prices in the country are at $400-460/mt CFR due the ongoing rises seen in Chinese suppliers' billet offers. In the short term, Turkish steel mills still have opportunities to find suppliers who are under pressure to conclude sales ahead of the new fiscal year and are willing to accept Turkish producers' targeted import
scrap prices, though it is very difficult for most
scrap suppliers to reduce their prices to these levels.