With Turkey aiming to conclude deep sea scrap deals this week to complete its needs for April shipment, it closed more deep sea bookings. However, the sentiment in the market has changed very quickly today, March 19, amid political turbulence. As of today, Turkish mills are not showing much interest in deep sea scrap cargoes, instead making inquiries for short sea cargoes to lower risks amid the high volatility observed in the Turkish lira-US dollar exchange rate.
SteelOrbis has learned that an ex-Sweden deal was closed by a Marmara-based producer yesterday for HMS I/II 80:20 scrap at $380/mt CFR, with bonus and shredded scrap at $400/mt CFR. This price is $1/mt higher than the previous level.
Meanwhile, an Iskenderun-based producer has concluded an ex-US booking for HMS I/II 80:20 scrap at $381/mt CFR, with bonus and shredded scrap at $401/mt CFR, for April shipment. This level is also $1/mt higher than yesterday’s daily price for this origin.
Trading in the Turkish steel and scrap markets has almost come to a halt given the sudden sharp depreciation of the Turkish lira against the US dollar following the detention of Istanbul mayor Ekrem Imamoğlu today. Imamoğlu was expected to be one of the main rivals of Turkey’s President Erdoğan in the next presidential election. Also, Imamoğlu’s university diploma was revoked yesterday, a move which in effect disqualifies him from running in the next election. The sharp volatility of the Turkish lira-US dollar exchange rate has created great uncertainty in the market. Trading at Istanbul’s stock exchange was closed twice in one hour as circuit breakers stepped in, Bloomberg reported. Turkey’s treasury and finance minister Mehmet Şimşek made an announcement assuring the markets that they are doing everything to make sure the markets continue operating in a healthy manner. Several sources in the steel markets reported that trading has almost stopped due to the difficulty in determining prices. “Turkish mills are not sure about the prices they should offer to the market. Under the current conditions, their sales on lira basis cannot be evaluated in US dollars. They cannot make any plans about selling or buying before the volatility softens,” a source commented. Another said that no new deep sea deals will be expected this week, adding, “Next week may also be silent. It is just before the holidays.” One other source said some small and medium-sized producers also have short dollar positions, stating, “People thought the Turkish lira-US dollar exchange rate closing the year at around 37-38 was a big possibility. The new developments in this regard will create hardship for some companies.” The Turkish lira depreciated from 36.69 against the dollar to 40.51 earlier today, before settling back at 38.02 at around 17:00 Istanbul time. SteelOrbis hears that Turkish mills are showing some interest in lower tonnages that are considered to be short sea, ex-Adriatic cargoes included. However, market sources report that the availability of such cargoes is not high. “There is no way Turkey can feed itself with only short sea scrap. But Turkish mills can gain some time by buying those,” one player added. Due to the fluctuation of the lira, several Turkish mills have stopped accepting lira-based payments for their domestic rebar sales. Some other producers have decided to close their sales for now to evaluate the situation. Most mills offered rebar at $595/mt ex-works today.