Following the deep silence and slowdown in Turkey’s import scrap market, a deal has been heard and has supported the view that deep sea scrap prices are still under pressure from buyers.
SteelOrbis has heard that a Marmara-based Turkish mill has concluded an ex-Denmark deal with the HMS I/II 80:20 scrap price at $440/mt CFR. No further detail has been shared about this deal, nor did the parties officially confirm the booking. However, it is widely believed to have been done. Also, the HSM I/II 80:20 scrap price in the cargo is in line with the previous expectations for ex-Baltic at $440-445/mt CFR.
The negative mood in Turkey’s steel market is impacting the international market. Scrap collection prices in the EU have declined to €355-365/mt DAP this week, while there is a doubt regarding the sustainability of the upper end. Due to concerns about a possible further decline in Turkey’s import scrap prices, scrap flow to sub-collectors has accelerated. One German sub-collector said, “It is still slower as compared to the same period last year but for now I can say it is enough.” Another sub-collector, again from Germany, commented, “We are keeping our own collection prices stable for now to increase inventory levels but, if dock prices remain the same, we can cut our collection quotations too.” While some European sources believe that domestic scrap prices are set to decline by approximately €15/mt, some believe European producers may keep their prices stable in March to maintain scrap flow. SteelOrbis has learned that a German seller concluded a deal for E1 grade scrap at €415/mt delivered to Italy, with freight at €58/mt. As the month of March is ending, Turkish mills are expected to evaluate their positions for May shipments. Although the general idea in the market is that they will ask for lower prices for deep sea scrap, their window for waiting is now smaller and there is much room to cover for May shipments. A European scrap seller stated, “Demand will start reviving in the coming week.” A Turkish producer stated, “The cash flow under the current circumstances of the absence of exports is a problem. Hence, the main issue is not the price of scrap.”
In the short sea segment, the ex-Romania 2,000 mt of HMS I/II 80:20 scrap price is now priced at $405/mt CFR Turkey as fixed in a deal to the Marmara region. The cargo also consists of 3,000 mt of P&S scrap at $430/mt CFR. The deal was done yesterday, March 29. Turkish mills report that short sea sellers need to sell, feeling the downward pressure more than alternative suppliers due to their unique financial structure.
Meanwhile, as SteelOrbis reported before, the Turkish government has announced a 15 percent discount on electricity prices for industrial usage and a 20 percent discount on natural gas prices, to be effective from April 1. This move is estimated to cut production costs from scrap to rebar by another $15/mt. Turkish mills are not exerting pressure only on scrap prices, but on billet prices too. According to sources, billet lots originating from Belarus and from Donbass have been offered to Turkey this week at as low as $583-590/mt CFR. The official offers from a large Russian supplier are standing at a higher level - $620-625/mt CFR, down $5-10/mt over the past week. The local billet market in Turkey is silent and offers have decreased by around $10-20/mt over the past week. This is all done to support the finished steel segment, which needs to move down in terms of price to be able to compete in export markets. Recently, Adnan Aslan, CIB chairman, stated that Turkey’s steel exports decreased by 40 percent in the first two months of 2023, adding that the earthquakes in the country’s southeastern region did not affect the decline in exports, as 60-70 percent of the 11 million mt of steel produced in Osmaniye, Hatay and Iskenderun was consumed in the domestic market. In addition, Mr. Aslan stated that the electricity and natural gas prices in Turkey may decrease to the same level as Europe from June this year. Currently, ex-Turkey rebar offers are standing at $710-720/mt FOB for April shipment, falling by $10/mt over the past week. In the local Turkish rebar market, most mills in the Marmara and Izmir regions are officially offering rebar prices at $730-740/mt ex-works, while additional discounts are applicable for serious buyers only. Today, Kardemir opened its domestic rebar sales with prices at TRY 13,880/mt ex-works, which was $724/mt with the currency at TRY 19.17 to a dollar. This price was considered high by the spot market players and sales were closed at midday, though Kardemir is heard to have sold 20,000 mt of rebar directly to a construction company.