Following the sharp decline observed in Turkey’s import scrap market over the past two weeks, a Turkish mill has concluded a deal from Scandinavia which reflects the persisting negative sentiment in the market. Turkish mills remain reluctant to conclude deep sea and short sea scrap deals, while scrap availability is on the high side.
The booking in question was concluded from Denmark by an Izmir-based producer with the HMS I/II 80:20 scrap price settling at $348/mt CFR. The deal was done on April 15, the same day as the ex-UK transaction reported by SteelOrbis yesterday. The price in the Scandinavian deal is $0.5/mt higher than the price expected after the ex-UK booking.
Market sources still report the problem in the scrap market is the lack of demand from Turkey, with sellers failing to find interested buyers. “We are failing to get bids. Some of us do not even voice offers, letting producers to start the negotiations with their numbers,” a European scrap seller mentioned. In particular, scrap inventories at European export yards have attracted attention. Several market players report that inventories are very high. A major US-based scrap supplier commented, “The problem in the EU is bigger than in the US. With the euro-US dollar exchange rate at 1.136, it should be hard for them to accept lower prices. However, we hear they have reduced their collection prices to €260/mt DAP in some regions. This level was not seen in recent years, and it is the lowest. Scrap flow to yards is very slow but exporters do not really need the tonnages. They are forced to sell to maintain cash flow though.” A German sub-collector also mentioned the €260/mt DAP price for a Belgium-based exporter, adding, “The rest of the exporters are still bidding at €270/mt DAP. But we are already in a holiday mood in the EU.” Starting on April 18, the Easter holiday will start in EU countries. Europe is expected to return to the market on April 22. Meanwhile, the number of available cargoes from the US is not low, with at least four cargoes expected to be in the market in the coming weeks. Market sources believe the next ex-US booking may be closed at around $350/mt CFR or lower under the current circumstances.
Today, Turkey’s steel market was focused on the Turkish Central Bank’s interest rate announcement. The bank has decided to increase the policy rate - the one-week repo auction rate - from 42.5 percent to 46 percent. It also raised the overnight lending rate from 46 percent to 49 percent and the overnight borrowing rate from 41 percent to 44.5 percent. Right after the announcement, the Turkish lira gained some strength and currently stands at TRY 38.10 to the dollar [14:54 Istanbul time]. Market sources think that the burden of loan interests on traders and small and medium-sized companies is increasing, making it harder for traders to hold or increase inventories on hand. The pressure on Turkish longs exporters from high costs, low demand and tough competition globally has lately been exacerbated by a dramatic drop in prices in the import scrap segment. As a result, prices for rebar and wire rod have gone down quite sharply, in both the domestic and export markets. Currently, ex-Turkey rebar prices vary at $550-570/mt FOB for late April-May shipment, down by $20-25/mt week on week. In the local Turkish rebar market, official offers and workable prices have settled at $555-595/mt ex-works, down by $15/mt on the lower end depending on the region.