Turkish steel producers find current scrap prices to be on the high side when their product price levels are taken into consideration. It is observed that at present they are only buying enough to meet urgent requirements. Some producers are focusing on deep sea scrap purchases, while others prefer to focus on buying billet instead.
Although the price for US origin HMS I/II 80/20 was at around $285/mt CFR for bookings concluded early last week, the price for the material in question moved up slightly to reach $293/mt CFR in the latest booking. This week offers for ex-US HMS I/II 80/20 are reported at around the levels of $297-300/mt CFR.
No matter how much Turkish producers try to guarantee their September production by making deep sea scrap purchases, they are still resorting to prompt delivery cargoes to secure their scrap requirements for August production. Consequently, many purchases of A3 grade scrap cargoes by Turkish producers are reported. The highest level heard for an A3 scrap cargo booking was at $288/mt CFR Marmara, while offers this week are heard to stand at $288-293/mt CFR Turkish ports.
Scrap purchase price levels in the local Turkish market have also moved up in line with the import prices. Producers' purchase price levels for HMS I in the domestic market are in the range of TRY 355-430/mt (approx. $240-291/mt).
Given current scrap price levels, the production costs of Turkish producers have now moved up. As a result, we observe that the producers are tending to increase their product prices as well. If their new product prices find acceptance in the market and if demand for their products revives, it is believed that the producers will then be more relaxed about accepting the current scrap prices. However, it should also be noted that demand for steel products has not been so brilliant for quite a while now.