The sentiment in the hot-rolled coil (HRC) market of Turkey has been mixed this week as there are several factors which appear to oppose each other. On one side, the demand for mills’ HRC has remained low in the local market and became nonexistent in the EU due to the summer vacation season. As a result, the export prices declined in a few negotiations, while in the local market some lower offers were available early this week. On the other side, as the market is trying to evaluate the consequences of sanctions applied against MMK Metalurji, and some of the suppliers, though mainly traders for now, have started testing slightly higher prices for coils and sheets. Cautious optimism in the import scrap segment is another factor for the mild increase attempts. However, most sources believe HRC prices will not increase in August, at least in workable levels, while the EU is not in the market to buy and since local end-user demand in Turkey lacks economic and financial support to pick up.
Earlier this week, the general level of local HRC in Turkey was at $650-670/mt ex-works in official offers, while levels of $640-645/mt ex-works were considered quite achievable and even $10/mt lower levels were expected by customers. Generally, the current market price is estimated at $630-650/mt ex-works. Some buyers consider $620/mt ex-works also to be achievable.
By the end of the week, some customers have started to receive indications at $670-680/mt ex-works for September deliveries. “After the MMK news, people are confused as some of them think the producer will halt operations at its HRC unit, which will automatically decrease the market HRC allocation,” a trader told SteelOrbis. However, the situation around MMK Metalurji remains unclear for now and the price moves are more considered to be just speculation, at least temporarily. Others believe the MMK factor is too weak for now and the more important thing is that the coated and cold-rolled steel prices have dropped again in Turkey.
Another issue is that, even despite the lack of aggressive import offers, Turkish HRC producers do not see much demand from local buyers. The latest deals for ex-Russia HRC were closed at $580-600/mt CFR, while currently most suppliers are out of the market and are expected to return with September volumes.
As regards exports, Turkish mills dropped prices to $610-640/mt FOB depending on the supplier, while a week ago the level was at $620-650/mt FOB. Since the EU is now out of the market, some negotiations were seen in North Africa at the lower end of the range. In addition, there has been talk about a sizeable sale to the UK at $600/mt FOB, but the information has not been confirmed by the time of publication. Overall, the range of $605-615/mt FOB is now considered workable for exports and, given the gap with the voiced domestic offers, players believe that the mills will for now fail to improve their domestic levels. “Anything can happen of course, but I think in August prices will even weaken a bit and without Europe there is little chance market will improve,” a source said.
In the retail segment, local hot-rolled sheet prices in Turkey are at $700-720/mt ex-works level this week, down by $30/mt from the higher end of the range since late July.