Following sharp depreciations in the value of the Turkish lira against the major currencies, Turkey almost made a quiet start to the current week in terms of scrap imports.
Although rumors of ex-Holland cargoes bought at $284/mt CFR and an ex-Baltic deal at $289/mt CFR, both for HMS I/II 80:20 scrap, were heard, these transactions have not been confirmed by the buyers or the sellers. Despite the lack of confirmation, the market widely believes that these deals were actually done and has calibrated its expectations accordingly.
Today, October 8, a Marmara-based mill has bought an ex-US cargo consisting of 20,000 mt of HMS I/II 80:20 scrap at $285/mt CFR and 25,000 mt of shredded scrap at $290/mt CFR, for October shipment. Prior to this deal, the ex-US HMS I/II 80:20 scrap price was at $293/mt CFR Turkey.
Also, another booking has been disclosed to the market, concluded by the same buyer from St. Petersburg, for HMS I/II 80:20 scrap at $279.50/mt CFR and bonus grade scrap at $289.5/mt CFR, but this deal was not confirmed by the buyer or the seller at the time of publication.
Some market sources state that currently there are too many sellers seeking to sell cargoes to Turkey. This situation has caused Turkish mills to remain relaxed and to wait further before concluding any deals as they suspect that there may be a further decrease in import scrap prices. Also, the silence observed in the long steel market for some time now has led Turkish mills to wait and see the price levels at which they will be able to sell. Some players expect benchmark HMS I/II 80:20 scrap prices to decline to $280-285/mt CFR Turkey in the first bookings that will be done and they think that this is only the beginning, that there is more room for prices to move down further.
Other market players are not so pessimistic and believe that prime grade scrap quotations will stand in the range of $280-290/mt CFR in the medium term. Following the domestic sales of Kardemir yesterday, October 7, sources think that Kardemir’s semi-finished and finished steel prices will set a benchmark for the market. As the Turkish lira lost strength very rapidly after Kardemir opened its sales yesterday, demand for its sales was good.
Some market players had thought that in particular flat steel prices would support domestic scrap quotations in the US, but the local US scrap market has moved sideways in the October buy-cycle and East Coast dock prices have decreased by $10/mt. Meanwhile, collection prices in the European Union are reportedly at around €208-210/mt and the strength of the euro against the dollar is still causing some issues for all European players.
On the other hand, Turkish mills have waited for a long time and still need to conclude import scrap purchases for November shipments. Some market players state that lowering the cargo tonnage and asking for a quicker delivery (i.e., late October shipment) is another option for buyers. But mostly the market expects the Turkish mills to resume purchases at full strength next week. Having said that, there are too many uncertainties surrounding the market such as the absence of China, which will return next week, and the geopolitical tensions Turkey faces, while the negative economic outlook in Turkey is also taking its toll on the steel market.