The mood in Turkey’s import scrap market has changed in a matter of days, supporting the idea that a slight recovery in steel demand may cause a momentary increase in scrap prices, such as was seen just before the Feast of Sacrifice holiday in early July. Trading in the local Turkish rebar market has recovered a little after an Izmir-based mill lowered its prices to the surprise level of $585/mt ex-works last week, but since then this level has disappeared and local rebar prices have increased to $620-640/mt ex-works with gradual purchases done by traders. Turkish mills have started price inquiries for deep sea scrap but have failed to obtain their target price levels, even above those levels from the sellers.
There were rumours of deep sea scrap deals done in the range of $345-352/mt CFR to Turkey in the current week, all denied by the parties supposed to be involved. As of today, August 4, some players believe that the market is on the brink of a price increase for deep sea HMS I/II 80:20 scrap. “There is a shortage of supply in the market, with not many offers given to Turkey by suppliers. Some of us do not have cargoes for the desired shipment dates. I wonder if the mills can find their needed tonnages,” a seller commented. Another stated, “One or two bookings potentially done at lower levels does not mean anything. We need a proper round of purchases to say that the price has increased or decreased. I can say US suppliers are not willing to cut their quotations. Instead, due to the price inquiries which started to come from Turkey, they are aiming for higher levels of $380/mt minimum.” Also, some sellers state that the alternative markets are still lively in terms of scrap demand. “Turkish mills may still decide to cut their capacity utilization rates or halt their production against increases in deep sea scrap prices. But even for those that will not do this, it is not possible to promise they will be able to find what they need. So, they may be forced to reduce production anyway,” one of the major US sellers stated, while an EU-based scrap seller expressed the same view.
During the current week, Turkish mills asked for $330-340/mt CFR for deep sea HMS I/II 80:20 scrap and around $300-310/mt CFR in the short sea segment. No deals in these ranges were concluded, showing the resistance of sellers. The collection prices of suppliers are not declining quickly. At the beginning of the week, some EU-based exporters bid for €280-290/mt for the equivalent of Turkey’s HMS I/II 80:20 grade, then reduced this to €270/mt yesterday, August 3, and raising their bids again today to €290-300/mt. Most sub-collectors are resisting such levels, citing their own collection costs and disruptions in the transportation of the material. According to a source, “The water levels of the Rhine in Germany are at critical levels. There are not enough train wagons or trucks or even truck drivers to fill the gap.” Meanwhile, trading in the local US scrap market has started at a slow pace. The expectations are still for a fall of at least $20-$30 fall in cuts and shredded prices, and down $50/gt for prime grades. The local US scrap market is expected to settle by the end of business on Friday, August 5. SteelOrbis believes that, if US scrap suppliers do not return to the Turkish market to meet the first wave of demand, the price increase could be higher than initially expected. Amid the lack of new deals in Turkey, SteelOrbis has kept its reference prices for benchmark deep sea HMS I/II 80:20 scrap price stable at $345-360/mt CFR.
In the short sea segment, ex-Adriatic HMS I/II 80:20 scrap offers have reached $365/mt CFR, though sellers and buyers have not come to an agreement. SteelOrbis understands that buyers are seeking slightly below this level. However, there are no offers from Romania and Bulgaria, as sellers there are waiting for deep sea scrap prices to settle at higher levels first. “There is some demand from Turkey. Turkish mills are trying to fill their immediate needs with short sea scrap. However, the freight for the Black Sea is too high due to the grain season,” a seller commented. SteelOrbis has increased its estimations for short sea HMS I/II 80:20 scrap to $340-345/mt CFR.