Following the announcement of higher energy costs for industrial usage by the Economic Coordination Board in Turkey, sentiment in Turkey’s import scrap market has deteriorated. Higher finished steel prices have failed to gain traction and so have not provided any support for the scrap segment. The three latest ex-US scrap bookings in Turkey have confirmed the negative outlook for the scrap market.
A Marmara-based Turkish steel producer concluded the first ex-US scrap booking for HMS I/II 80:20 scrap at $370/mt CFR, with shredded and bonus grade scrap at $390/mt CFR. The same mill bought another ex-US cargo with HMS I/II 80:20 scrap at $371/mt CFR, and shredded and bonus grades at $391/mt CFR. Both cargoes are expected to be shipped in November.
Additionally, an Iskenderun-based producer has concluded an ex-US booking today, September 4. The cargo consists 5,000 mt of HMS I/II 80:'0 scrap at $370/mt CFR, 15,000 mt of shredded scrap at $390/mt CFR, 3,000 mt of P&S scrap at $390/mt CFR and 7,000 mt of HMS I/II 90:10 scrap at $374/mt CFR. The previous ex-US deals were closed at $375/mt CFR.
Currently, the scrap collection price of a Belgium-based scrap exporter stands at €290/mt DAP. On Monday, an Amsterdam-based exporter bought scrap at €301/mt DAP. Another European scrap exporter reports that its collection prices are at around €295/mt DAP, adding that lower prices are met with slower flow to yards. A major steel producer in Turkey commented that deep sea scrap prices have further room to move down, stating, “I am not saying that we are expecting a deep dive, but another downward correction is possible.” One European seller said that the euro-dollar exchange rate at around 1:1.05 gives European sellers some room to compete with US suppliers. Domestic scrap prices in the US have not settled yet, though the expectations are for a decline. Meanwhile, Turkey’s steel sector continues to indicate a slowdown. Crude steel production in Turkey decreased by 2.9 percent year on year in August this year to 2.8 million mt, according to a statement released by the Turkish Steel Producers’ Association (TCUD). In the January-August period this year, Turkey produced 21.6 million mt of crude steel, down by 12.1 percent year on year. Strong concerns regarding the last quarter of 2023 are being voiced by market players, especially after the announcement of higher energy costs. Most Turkish mills agree that the total additional cost of the new energy prices will be around $12-15/mt. SteelOrbis published a report regarding the increased energy tariffs and their impact, yesterday, October 3.
Meanwhile, short sea scrap prices in Turkey are under pressure from the mills. A Mediterranean scrap supplier reports that most Iskenderun-based producers are showing little interest in short sea scrap offers, stating, “We are aiming for $335/mt CIF Iskenderun, though the response of producers remains to be seen.” The most recent ex-Romania deals were at around $340-343/mt CFR, $2-5/mt lower than the previous deals.
