Turkish mills have accelerated their scrap procurements as only six days are left in July and there is a long way to go for producers’ purchases for September shipments. While new deals are mostly done by US suppliers, new transactions have also reduced the high number of offers from the region.
An Iskenderun-based steel producer has concluded a deal from the US with HMS I/II 80:20 scrap at $346/mt CFR. This cargo will be shipped in early September. Another mill in the Marmara region has also concluded a booking from the US for HMS I/II 80:20 scrap at $346/mt CFR, with shredded and bonus grade scrap at $366/mt CFR. A rumor of an older ex-US scrap transaction by an Izmir-based producer has been shared today, July 24, for 15,000 mt of HMS I/II 80:20 scrap at $345/mt CFR, with 7,000 mt of shredded scrap at $365/mt CFR and 10,000 mt of bonus grade scrap at $365/mt CFR. This deal is believed to have been closed earlier this week, though there is no confirmation from the buyer or the seller. Meanwhile, another Iskenderun-based producer has concluded an ex-US scrap booking consisting of HMS I/II 95:5 and bonus grades with the average price being $364/mt CFR. The details of the cargo were not shared by the parties. Along with the new information, SteelOrbis has revised its ex-US scrap reference price to $346/mt CFR from the previous $347/mt CFR.
In addition to the abovementioned ex-US scrap bookings, a mill in the Marmara region has concluded a purchase from Sweden, with HMS I/II 80:20 scrap at $346/mt CFR, and shredded and bonus grade scrap at $366/mt CFR. Since ex-Scandinavia cargoes are favored by Turkish buyers as compared to other ex-Baltic cargoes, the price being similar to the ex-US scrap bookings was not a surprise. SteelOrbis has revised its reference prices for ex-Baltic scrap to $344-346/mt CFR from the previous $343-344/mt CFR range.
“At the end, the high number of offers from the US segment has caused a very small price reduction, merely by a dollar,” a seller commented to SteelOrbis. Another source from the European sellers’ side said, “There is an expectation of an increase in the market, but I do not agree much. An increase of $2-3/mt is not a real one. The recent upward revisions done by steel mills for rebar are triggering this one for scrap, though Turkish mills will barely succeed in gaining some money now.” Most market players believe that the deep sea scrap market is still within a wide range of $335-350/mt CFR. “There is no push for a sustainable uptrend in the local rebar and import scrap markets. Steel demand is very low, especially for exports,” a source from a mill commented today. Turkey’s need for deep sea cargoes to be shipped in August are almost completed, though there is a long way to complete orders for September shipments. With import billets losing their attractiveness, Turkey may show more interest in scrap from now on. “This is part of the optimism seen in the deep sea scrap segment. We all know prices are not moving down. The pace of collection during the August holidays, scrap availability and collection prices would not give way to a downward movement. I am not even mentioning the euro-dollar exchange rate and increased sea freight. But the upward push is also weak, and we know it,” another scrap supplier admitted.
The uptrend recently seen in China has caused a price revision on the Turkish mills’ side. Following the increases announced in the local market, export prices have also been raised. As SteelOrbis mentioned yesterday, July 23, Turkish rebar export offers vary at $540-550/mt FOB for August shipments, up by $5/mt week on week. According to sources, a few inquiries from the Balkan region are on the table, while the counter-bid prices seem closer to $530/mt FOB. As of today, July 24, the Central Bank of the Republic of Turkey (CBRT) cut its policy interest rate by 300 basis points, lowering it from 46 percent to 43 percent. The CBRT also reduced the overnight lending rate from 49 percent to 46 percent, and the overnight borrowing rate from 44.5 percent to 41.5 percent. The cut was anticipated for weeks. Over the past week, the Turkish lira has lost strength against the US dollar from 40.20 to today’s 40.48 level. As a result, some further increases were announced in Turkish mills’ rebar prices shared with the local market, increasing the workable levels to $540-550/mt ex-works, depending on the region, $5/mt higher on the lower end as compared to yesterday. On the other hand, the depreciation of the lira has caused the upper end of local rebar prices to drop by $5/mt on US dollar basis, narrowing the range as compared to yesterday.
Under the current circumstances, any upward movement in Turkey’s deep sea scrap market is expected to remain limited and a downtrend is considered unlikely by SteelOrbis. Unless demand for Turkish steel recovers or silent capacity utilization cuts done by mills become visible with official announcements signaling longer periods, a sharp change in the market is not expected in the short term.