Following the week-long holiday in Turkey, the market is expecting a price softening. The past week has been silent, with some unconfirmed rumours of deals closed in the range of $400-405/mt CFR. Following the ex-US scrap deals closed at around $410s/mt CFR, Turkish mills decided that prices were moving up rapidly once again, while they were still failing to sell steel at above $700/mt CFR. With the support of the holiday, they took a step back and decided to wait. Since the fundamental factors that caused Turkey to stay out of the international scrap market for a long time have not changed, the recent price increase was caused by postponed demand. Now that the urgent need for scrap imports has been satisfied, Turkish mills are once again asking for lower quotations.
“I think a balance will be met in the market after prices decline below $400/mt CFR for benchmark HMS I/II 80:20 scrap,” a source commented, “However, it is not easy to guess the bottom since we do not know the exact tonnage that Turkish mills need for the second half of August.” There are some ex-US and ex-Canada offers to Turkey, mostly for higher grades such as HMS I/II 95:5 scrap or HMS I/II 90:10 scrap at around $397/mt CFR. Offers from those regions were around $410-415/mt CFR last week. Also, there is a rumour of an ex-Denmark deal to a Marmara-based producer at $390/mt CFR. The seller in question was offering $415/mt CFR last week. As a result, SteelOrbis believes that the resistance of sellers to lower quotations is now broken. More deals are expected this week as Turkish mills need scrap for the second half of August. The future trend of prices is likely to be a slight decrease.
Meanwhile, the local steel market is waiting for the decision of Turkey’s central bank on interest rates to be announced on July 21. It is largely believed that the central bank will keep interest rates stable. Usually, the depreciation of the Turkish lira against the major currencies would lead to a recovery in steel trading, but, due to the economic difficulties in Turkey, traders state that they are not planning to take risks.