A new ex-UK deal was disclosed to Turkey’s import scrap market late yesterday, July 19, and, with its price higher than that recorded in the latest ex-US scrap booking, it has surprised the market.
SteelOrbis has learned that the ex-UK scrap cargo was bought by an Iskenderun-based Turkish mill with HMS I/II 80:20 scrap standing at $362/mt CFR, and shredded and bonus grades at $387/mt CFR. The gap between HMS I/II 80:20 scrap and the higher grades is $25/mt, higher than usual. The total tonnage is 30,000 mt, while the cargo will be shipped in the first half of August. While the deal is said to have been done on July 19, some market players voice their suspicion regarding the date, saying this price level is closer to the levels talked about last week. “Since we do not know the exact buyer or the exact content of the cargo, I would like to see another ex-EU deal at this level before accepting this price,” a source commented. Another source said that the workable price is now lower than this, adding that the ex-US deal closed at $355/mt CFR may have a stronger impact on future decisions. A third market player said that the deal may involve special circumstances and should not be considered indicative. The buyer and the seller of the cargo had not commented on the situation by the time of publication. As a result, SteelOrbis will keep its ex-EU HMS I/II 80:20 scrap price at $350/mt CFR, instead of raising it to $362/mt CFR.
A source from a Turkish mill said today, “We do not have big expectations for the rest of this year. We would be glad if we could only preserve the current production rates.” It is observed that the morale of Turkish producers is deteriorating amid the ongoing sluggish steel demand. On the other hand, slower credit availability as well as the disruptions of general cash flow are adding to mills’ difficulties. Today, the Central Bank of the Turkish Republic (CBTR) increased its interest rates by 250 base points to 17.50 percent. The general expectation was an increase to 20 percent, with the Central Bank’s decision below expectations for the second time in a row. Also, the Central Bank said in its announcement that monetary tightening will continue in Turkey. As SteelOrbis reported previously, in June the Turkish lira sank to a new record low losing 25.5 percent in value month on month, falling to $1 = TRY 26.06. Today, the currency is at 26.89 to the dollar. On the other hand, scrap suppliers believe that prices may be close to hitting the bottom. “European sellers will have difficulty cutting their prices below $355/mt CFR, their collection quotations do not allow it,” a Baltic scrap seller said. While one ex-US scrap supplier thinks the bottom will be hit at $350-355/mt CFR, the Baltic scrap supplier said the bottom will be at $350-360/mt CFR. “Turkey has not bought many deep sea cargoes for August shipments, has a long way to go, and these levels are workable,” another seller said. As SteelOrbis reported yesterday, the lowest collection prices in the EU are at €270-280/mt DAP. However, all European players admit that scrap flow to export yards at this price is almost zero. A major producer located in Turkey’s Izmir region announced its domestic rebar prices at $575/mt ex-works today, supporting the idea that the lack of demand is exerting strong pressure on producers’ price policies. Turkish mills’ domestic rebar quotations are mainly in the range of $575-590/mt ex-works.