At the end of June, prices declined sharply in the import scrap market in Turkey and there was an expectation of a gradual downward trend in the market at the beginning of July. However, with the price declines in sales concluded by a US scrap supplier during a visit last week by its senior executives to Turkey, the downtrend recorded in the import scrap market gained momentum. Two steel producers in Turkey's Iskenderun region concluded deals with the same supplier for HMS I/II 80:20 scrap at $252/mt CFR. These low-priced deals caused astonishment among market players since there had been no new ex-US scrap deal heard in the Turkish market since mid-May. Also, another Turkish steel producer last week concluded an ex-Baltic deal for a scrap cargo including HMS I/II 80:20, shredded scrap and bonus grade scrap at the average price level of $250/mt CFR. The same steel producer had concluded another scrap deal with the same supplier one week earlier at $276/mt CFR. Accordingly, a rapid decline of around $26/mt was observed during the space of a week. Meanwhile, there are rumors that a steel producer in Izmir concluded an ex-UK deal for HMS I/II 80:20 scrap last week in the range of $242-245/mt CFR, while the previous deal for the same grade concluded by the same Turkish producer one week earlier was at $257/mt CFR.
In the current week, it is heard that a steel producer in Turkey's Marmara region has concluded two rebar deals, one to the UAE for 20,000 mt and the other to the Omani market for 22,000 mt. However, Turkish steel producers report that these are routine deals and should not be interpreted as an improvement in the finished steel market. On the other hand, Chinese steel producers are giving aggressive offers to the export markets against the backdrop of ongoing sharp declines recorded in demand and prices in the local Chinese semi-finished and finished steel markets, with some finished steel product prices falling to their lowest levels in recent years. At present, Chinese billet offers to Turkey are reportedly at the low levels of $315-320/mt CFR.
Market sources believe that the sharp decline in iron ore prices to $50/mt CFR may put pressure on scrap prices. Under these circumstances, Turkish producers are seeking lower import scrap prices and their firm bids to scrap suppliers are in the range of $235-240/mt CFR. Scrap suppliers consider this price range to be surprisingly low and state that, after such a sharp decline in prices, prices should now move down at a more gradual pace. Also, some European scrap suppliers say that, even though the euro has lost strength against the other currencies, declining to €1.1 to the US dollar, Turkish steel producers' firm bids are too low for them. Yet, other European suppliers believe that, to conclude new sales in Turkey, ex-Europe offers should adapt to the current trend in the market. While it still is unclear whether European suppliers will move to accept Turkish producers' firm bids, in the coming period ex-Baltic and ex-US scrap deals are expected to be concluded more frequently and the prices are predicted to maintain their downward movement.