Following the sluggish transaction activity recorded in May, import
scrap purchases in
Turkey, which had revived in the second week of June, slowed down once again last week. In the current week, Turkish steel producers' demand for import
scrap has been at very low levels.
Last week, Turkish steel mills reduced their import
scrap purchases since
scrap suppliers' offers were higher than Turkish steelmakers' expectations. At the beginning of last week, Turkish steel producers concluded ex-UK and ex-Baltic HMS I/II 80:20
scrap deals at $226.5/mt CFR and $225/mt CFR, respectively. Following these deals, Turkish mills' price ideas for import
scrap declined further. In fact, SteelOrbis has been informed that some Turkish steelmakers' price ideas for import
scrap are even at around $200/mt CFR.
At the end of last week, China's State Administration of Taxation announced that it is carrying out special audits on tax refunds received by steel producers in Tangshan for exports of square bars, giving rise to different expectations among global market players regarding the raw material and finished steel markets. Chinese suppliers had been exporting square bars in place of billets, as they could then avail of a tax refund instead of being subject to 20 percent tax. This was causing uneasiness in several foreign markets. Due to the abovementioned measure in China, in the coming period the volume of Chinese billet supply to the global market is expected to fall, while costs in the global market are expected to rise, which could also trigger upward movement in
scrap prices.
On the other hand, it is believed that billet prices in the local Chinese market will decline due to the latest Chinese measure. As a result, it will be easier to find more attractive Chinese finished steel prices in the global markets. Currently, Chinese billet prices in the global market are moving sideways, while billet quotations in the local Chinese market have declined since June 20.