While Turkey’s import scrap market has remained silent over the past week, sentiment has changed and is now interpreted as negative by market players. The main reason for the pessimistic mood is the lack of movement in the long steel market, with higher price levels for rebar failing to find buyers as players wait for some real demand to materialize. Additionally, the flat steel market is now feeling the downward pressure from import offers. Also, Ramadan will start as of tomorrow, March 22, and Turkey is getting ready for an election to be held on May 14.
Turkish mills are exerting pressure on deep sea scrap quotations since they have completed their purchases for April shipments. There is still some room for them to wait before starting to buy for May shipments, though it is largely believed that they will need a lot of deep sea cargoes for this delivery period. Turkish mills are aiming for ex-EU HMS I/II 80:20 scrap at $440s/mt CFR Turkey, while they are aiming for $450s/mt for ex-US HMS I/II 80:20 scrap. Turkey’s long steel market has been supported particularly by domestic demand, as export opportunities for Turkey have been few for a long time. Israel, one of Turkey’s export markets, has been flooded with Russian materials. Yemen is also able to find lower prices from other seller regions as compared to Turkey. Meanwhile, China is aggressive with its hot rolled coil (HRC) offers via traders. If the modest demand situation persists, the aggressive import pricing may pull down the general HRC price levels in Turkey, as SteelOrbis reported yesterday, March 21. Local billet prices in Turkey are now in the range of $670-690/mt ex-works, while import billet prices for Turkey are standing at $615-630/mt CFR Turkey, with billet prices also indicating a softening.
Today, during the Turkish Steel Exporters Association’s online event, several market players reported that construction in the earthquake-hit region of Turkey has not started yet. The total number of tenders held by the government is 77 for now, indicating that approximately 41,950 housing projects are covered by these tenders. However, the total number to be rebuilt is estimated at around 441,000. It is widely believed that, once rebuilding starts in the region, demand will be lively but the general idea in the steel sector is that rebuilding works will not start quickly. “There are still more important issues to be resolved in the region regarding people’s lives and temporary accommodation,” the representative of an Iskenderun-based steel mill commented during the online event. Although market players are sure that Turkey can meet the additional construction steel demand estimated to be around 4 million metric tons, energy prices are expected to be the main cost item. Turkey’s total construction steel production in 2022 was 23 million metric tons, which was below the full capacity of Turkish mills. It has also been learned that a further cut in energy prices is expected for April. Again, a source from a producer said that the total decline in energy costs has reached approximately 25 percent from the peak levels, after the recent adjustments made by the government.
Sellers state that several ex-US cargoes have been sold to Mexico, while European scrap has also found some alternative markets instead of Turkey. As of today, collection prices for HMS I/II 70:30 scrap in Amsterdam and at Belgian ports are at €365/mt, while for HMS I/II 80:20 and bonus grades in Belgium prices are at €375/mt and €380/mt respectively, all DAP. These levels indicate that export yards are reducing their bids for collection and are currently not aggressive in procurement. Last week, collection prices were in the range of €380-385/mt DAP. On the other hand, scrap flow is still said to be on the low side. The economic slowdown is still negatively impacting scrap generation in the EU. Today, during the Turkish Steel Exporters Association’s online event, deep sea scrap offers were estimated to be in the range of $445-450/mt CFR. Before the earthquake happened on February 6, the deep sea HMS I/II 80:20 scrap price in Turkey was in the range of $421.5-430/mt CFR. Since then, deep sea scrap prices have increased to $457-465/mt CFR. Turkey has met its needs for April shipments and so is in the mood to wait a bit and exert pressure on prices as abovementioned. While another recovery in prices is expected when demand returns to the market, prices are set to decline $10-20/mt from the latest price levels recorded in deals. A scrap supplier commented that the May shipment scrap cargoes will be used in June production, when generally the construction season in Turkey is lively. Under the current circumstances where there is a lack of new deep sea scrap deals in the market, SteelOrbis will reduce its HMS I/II 80:20 scrap reference price to $450-460/mt CFR Turkey.