With so few deals heard last week, the scrap market in Turkey has this week also been characterized by a lack of activity. Since demand in the overall finished steel markets is considerably weak, Turkish producers have been struggling to accept the rising scrap prices.
Scrap collection levels across the world have decreased due to the sluggishness in industrial activity and in consumption levels. In this context, since supplies are not so strong, scrap prices are increasing. While ex-US HMS I/II 80:20 scrap was being offered to Turkey last week at around $265-270/mt CFR, the same offer has this week been standing at around $275/mt CFR. Due to the increase in the US dollar/euro exchange rate, ex-Europe HMS I/II 70:30 scrap offers have this week increased to $266/mt CFR from last week's offer price level of $255/mt CFR. Freight rates to Turkey have increased to $35/mt from US East Coast ports and to $28/mt from Europe. Turkish mills are not so happy with the uptrend in scrap prices at a time when finished steel product prices in both the Turkish domestic and export markets are on the way down. As a result, the Turkish mills have been delaying their ex-deep sea scrap purchase activity for the time being.
Meanwhile, ex-Black Sea A3 grade scrap prices are currently at $260-265/mt CFR Turkey. It is also heard that there have been some deals for small tonnages at price levels of $260-262/mt CFR Marmara.
It is possible that the Turkish mills may delay their ex-deep sea scrap purchases and continue to buy small tonnages of scrap (when they find attractive price levels) until the demand for finished steel products recovers and allows the Turkish mills to see their way more clearly. The situation in the finished steel product markets has now been affecting the scrap purchase strategies of the Turkish mills for a considerable length of time.