In the months of August and September, Turkish producers had concluded only a limited number of import scrap purchases as they had also postponed their purchases for immediate needs. However, Turkish steel producers' demand for import scrap has been increasing in line with the rises seen in prices since the beginning of October. Currently, it is observed that several Turkish mills are seeking to purchase import scrap but very few scrap suppliers are in the market to conclude sales, and so demand exceeds supply at present.
Chinese and CIS-based suppliers have raised their billet prices to Turkey amid the strong scrap demand coming from Turkish steel mills and also due to the increases recorded in import scrap quotations for Turkey. No Chinese billet transaction in Turkey has been heard for a long time since the current levels of Chinese billet export offers, which had moved up in parallel with the rises seen in Chinese domestic finished steel and semi-finished steel quotations, have failed to gain acceptance from Turkish producers. Under these circumstances, Turkish mills consider that steel production using import scrap without any obligation to export under Turkey's inward processing regime is still more attractive than billet-based production. In order to avail of relief on import duty rates for billet under the inward processing regime, Turkish mills would have to give a commitment to export the finished products, whereas demand in the export markets is currently slack.
Additionally, domestic flat steel prices in Turkey have moved up amid improved Turkish flat steel export sales. Current domestic flat steel quotations have made it easier for Turkish flat steel producers to accept the rises recorded in import scrap prices. In recent weeks, regular import scrap tenders held by the biggest steel producer in Turkey have attracted the attention of market players.
Demand for domestic rebar in Turkey, which had improved slightly in previous weeks, has failed to reach expected levels due to the cash flow problems experienced by stockists and problems regarding credit. Meanwhile, on the export side Turkish steel mills' rebar quotations have failed to gain acceptance in the most important export markets, such as the United Arab Emirates (UAE) and the US.
In the current week, import scrap transactions in Turkey are expected to continue, while HMS I/II 80:20 scrap prices which were at $220/mt CFR Turkey last week are expected to increase due to the imbalance between demand and supply.