Low import scrap supply in Turkey

Tuesday, 23 October 2018 15:50:43 (GMT+3)   |   Istanbul
       

Only limited number of scrap purchases from Turkish steel mills has been heard over the past week as it has been for a long time since it has become harder for Turkish mills to gain a clearer picture of their future finished steel sales which are already slow in both their domestic and export markets. It is observed that Turkish steel producers are unwilling to bear higher inventory costs in these more difficult times, preferring to reduce their inventory levels of scrap almost by half as compared to previous terms.

Despite Turkish mills’ significantly competitive finished steel prices as compared to global quotations and their ongoing sales to markets such as Yemen and Israel, they are failing to compensate their losses resulting from the almost ceased domestic sales as well as sales to the US. This causes Turkish mills to decrease their finished steel export prices, while it also reduces the difference between scrap and finished steel prices. As a result, Turkish steelmakers are seeking for lower import scrap offers, though they experience difficulties to procure cargoes at these desired levels. The scrap tonnage offered to Turkey has declined amid strong price and demand levels in major scrap suppliers, such as the US and Europe, and also due to other importer countries which are ready to pay higher prices for scrap. Additionally, the drop in the water levels of the Rhine River is increasing freight, reducing scrap supply as well as making it harder for European scrap suppliers to procure scrap tonnages they seek. 

Although Turkish steel mills have failed to reduce their scrap purchasing prices, they are at least trying to maintain the previous levels at $323-328/mt CFR (for HMS I/II 80:20 scrap) but they are forced to accept higher deal prices for spot deliveries or for cargoes from trustworthy suppliers as regards the quality of the scrap. In the most recent ex-Baltic scrap transactions in Turkey, HMS I/II 80:20 scrap has been bought at $330/mt CFR. Also, SteelOrbis has been informed that ex-Rustov deals inTurkey for A3 grade scrap have been concluded at $325/mt CFR.

Turkish steel producers are expecting a normalization in the US’ duties on steel imports from Turkey since the tension between Turkey and the US has recently softened. Since no confirmation from the US government regarding this issue has been heard, Turkish steel mills are expected to avoid restocking activities and continue to conclude scrap purchases only in line with their needs until they see a significant revival in their finished steel sales.


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