While Turkey’s import scrap buyers have maintained a very cautious stance amid the war in the Middle East, there have been some successful attempts to conclude deep sea scrap deals. As regional tensions escalate, Turkey announced that a ballistic missile launched from Iran was intercepted by NATO defense systems before entering Turkish airspace yesterday, March 4. A statement published by Iran’s state news broadcaster said, “The Armed Forces of the Islamic Republic of Iran respect the sovereignty of the neighboring and friendly country, Turkey, and deny any missile launch toward that country’s territory.” As a result, the impact of the war on Turkey’s steel and scrap markets remains indirect and is expected to continue that way.
Meanwhile, a producer in Turkey’s Iskenderun region has concluded an ex-Netherlands deal done earlier this week for HMS I/II 80:20 scrap at $365/mt CFR, with shredded and bonus grades at $385/mt CFR. Another ex-Germany deal is reported to have been closed by an Izmir-based producer on March 3, with the HMS I/II 80:20 scrap price at $370/mt CFR. These two bookings indicate that ex-UK/EU scrap prices are now in a wider range, changing from $368-369/mt CFR to $365-370/mt CFR.
Another transaction, from Riga, has been concluded by an Izmir-based steelmaker for HMS I/II 80:20 scrap at $372.5/mt CFR, with shredded and bonus at $392.5/mt CFR and busheling grade scrap at $397.5/mt CFR. This deal is believed to have been done yesterday, March 4, with the average price for ex-Baltic bookings dropping by $0.5/mt as compared to the previous range at $372-374/mt CFR.
The depreciation of the euro against the US dollar may provide some support for European sellers in terms of FOB dollar-based prices, though the increasing sea freight and insurance costs are expected to prevent any meaningful drop in ex-EU scrap quotations. In the US, local scrap prices have settled sideways and local scrap demand is lively amid concerns over potential problems in pig iron and DRI imports, sources report. “Deals done from the EU are showing a cautious stance against exposure,” a scrap supplier said. Another supplier said that they had not been reducing their offers below $370/mt CFR for some time and now they are not forcing any prices due to the current uncertainties. A third scrap supplier said that they are monitoring sea freight rates very closely and mentioned they are worried about them. Meanwhile, Turkish mills are trying to increase their domestic and export rebar prices, but the uptrend is mainly supported by factors other than demand, which has remained weak. One of the main reasons is the impact of the war in the Middle East, triggered by the US-Israel strikes on Iran, which, amid many consequences, has immediately led to a jump in oil and gas prices. Consequently, there has been a significant rise in international freight rates for maritime operations, supported also by higher risks associated with passing through the Red Sea, not even mentioning the situation in the Strait of Hormuz. A source from a major Turkish mill stated, “This is not a time to move quickly in any segment, not for procurements but neither for sales. There should be delayed rebar demand in Turkey. However, amid the recent events, I am not sure whether construction companies can go on with their pre-war plans. Also, financially, traders are in a hot spot.”
Additionally, the billet market in Turkey has been evaluating developments following the outbreak of war in the Middle East, trying to keep up with the possible consequences for the steel sector. While offers from Asia are still present in Turkey and are higher week on week due mainly to higher freight rates, Turkish buyers are hesitant and are expected to incline towards local purchases or Russian material, though only for small lots at the moment. While import scrap price levels are strong and will remain firm partially due to the freight rate situation, the $5/mt increase on the rebar side seen locally this week is not helping Turkish mills to increase their billet price indications. Chinese offers were standing at $490-495/mt CFR earlier this week, inching down later to $485-490/mt CFR, with cargoes available for May shipment. The SteelOrbis reference price for ex-Russia billet has remained stable on average at $435-445/mt FOB Black Sea, with the tradable level to Turkey close to the lower end of the range, while offers are at $440-445/mt FOB.