Despite the difficulty they are facing on their rebar sales side, Turkish steel producers have kept on purchasing scrap as their inventory levels reached critical lows. Recently their product sales have gained some momentum with the semi finished sales to the Far East, and wire rod and merchant bar to the US markets.
The strong demand coming from the Far East is resulting in a stronger scrap market in the US, and thus the US origin scrap prices for Turkey keep rising. Ex-US HMS I/II 80/20 concluded prices increased to $298/mt CFR late last week from the early week levels of $292/mt CFR. Despite the strong demand, the limited supply situation is expected to result in further increases in the US domestic scrap prices in August. New US HMS I/II 80/20 offers are expected to be at above $305/mt CFR levels.
Despite the European steel market is stagnant and the holiday period has started in many regions, European scrap offers have also started to follow the increase in the US and have increased. The price for HMS I/II 70/30 ex-Europe has increased from $285/mt CFR early last week level, to reach $294/mt CFR in the latest bookings.
The situation is not much different in the Black Sea A3 scrap side. Even though the steel producers are putting pressure on the smaller tonnage Black Sea cargoes, A3 scrap is also on a rising trend. The price level for latest bookings heard is concluded at $297/mt CFR. Current offers are reported to be in the range of $297-305/mt CFR.
Turkish steel producers feel the pressure of this rising scrap price trend, on the back of very weak rebar market situation. The possibility of a stronger rebar market in the short run is pretty low considering the slowing impact of the holiday season and the Ramadan. However, it is observed that the steel producers, that are able to sell semi finished, wire rods and merchant bars to the US and the Far East keep on buying scrap for the time being.