The expectations of Turkish mills and deep sea scrap sellers differ this week, after a quick round of deals recorded in the last round of bookings. Some mills consider current price levels acceptable for the coming deals, while others believe prices will be corrected downwards. On the other hand, sellers are standing firm in terms of offers.
Sellers citing their collection costs, slower scrap flow, stronger billet quotations and also the positive indications from China state that the current levels, if not even higher, should be accepted by Turkish mills. “Turkey still needs deep sea bookings for shipment in the second half of February. The mills cannot wait long,” a supplier stated. It is observed that there are a number of sellers in the market seeking opportunities to conclude sales, though they are not aggressive in their offer prices.
On the other hand, some Turkish mills are expecting a downward correction as they think prices have increased more than they should have over the previous round of purchases. Several producers, both in the longs and flats segments, commented that their finished steel sales have not been as good as their initial expectations. In addition to this lack of sales, their costs are rising with the increased electricity and natural gas prices, and also higher worker salaries. The real impact of these rises will be seen around February 10, SteelOrbis understands, but the first expectations vary between $15-32/mt. “Flat steel producers are more or less relaxed as compared to long steelmakers as we sell two and a half months ahead,” one producer commented. Another producer reported that some mills with wider product ranges are focusing on HRC, wire rod or profiles instead of rebars. “Despite the improvements observed in China, Turkey cannot sell to the region with its current quotations,” another producer stated, “and so exports will remain tight.”
“The biggest problem to be experienced in 2022 will be access to cash,” a Turkish long steel producer said, adding, “Like everything, the cost of finding money is rising.” This financial tightness is also felt in the local Turkish rebar market, as most traders are working with credit. Construction projects have been halted in Turkey due to winter conditions as well as tight cash flow. SteelOrbis observes that only 30 percent of rebar is bought by construction sites, while the rest is traded between traders. Ahead of the Turkish central bank’s announcement of new interest rates on January 20, the rebar market is trying to understand the best course of action and has been relatively silent since the beginning of the current week.
Currently, SteelOrbis’ deep sea scrap price range stands at $465-473/mt CFR, with the lower end representing estimations for ex-EU HMS I/II 80:20 scrap, while the upper end represents ex-US scrap fixed in deals. Under the current conditions, deep sea scrap prices in Turkey are expected to remain in their current range. It may be said that Turkey’s import scrap market is at a crossroads. As SteelOrbis reported earlier today, some mills have turned to short sea scrap bookings to gain some time against deep sea suppliers.
