Since the beginning of Russia’s invasion of Ukraine, prices in Turkey’s import scrap market have risen at a rate that has not been seen for a long time. The current uncertainties and the slow flow of scrap to export yards in all supplier regions have caused sellers to maintain a cautious stance. As sellers are trying to understand their future collection costs, Turkish mills’ aim is to secure their scrap needs. On the other hand, with the two major players out of the market due to the ongoing war, Turkey is receiving demand from buyer regions which have seen their previous orders, particularly for billet and slab, being cancelled. Also, some Turkish producers’ orders for ex-CIS billet and slab were likewise canceled. Nevertheless, the upward trend of deep sea and short sea scrap quotations is expected to continue in the coming days.
SteelOrbis has learned that an Iskenderun-based mill has concluded a deal from Latvia for 23,000 mt of HMS I/II 80:20 scrap at $585/mt CFR, 6,000 mt of shredded scrap at $610/mt CFR and 6,000 mt of bonus grade scrap at $610/mt CFR, for April shipment. Before this deal, the ex-Baltic HMS I/II 80:20 scrap price was standing at $520-530/mt CFR.
Before the abovementioned deal, a rumor surfaced in the market late yesterday about an ex-EU scrap deal done by another Iskenderun-based mill at $460/mt CFR. With the one from Latvia disclosed today, this level is now considered low for European HMS I/II 80:20 scrap. European sellers state that scrap flow in the region is very slow and that the war has impacted the mood in the steel market. “European producers are struggling to procure ferroalloys as they were previously working with Russia. Now that it is absent, we are not sure about availability. Also, scrap flow is very slow, while prices are rising rapidly in the local market,” a source commented. In the EU, the most recent collection prices voiced by market sources were at €415-420/mt and they are expected to rise further. According to a source in Germany, “This is a risk for European producers. I am not sure if they can afford the rises.”
Meanwhile, short sea scrap prices for Turkey have recorded a huge jump on the back of an ex-Romania deal closed at $555/mt CFR for HMS I/II 80:20 scrap. The previous deals were at $510-515/mt CFR from Romania and the Adriatic region. “With the short sea segment reaching this point, no one should wait for European scrap prices to remain in the $460s/mt CFR,” a source commented. With Lebanon starting to export scrap to Turkey again, SteelOrbis has heard that a Turkish mill’s bid for Lebanese HMS I/II 80:20 was at $525/mt CFR, but this price was not accepted by the seller.
The main driver of the market is the unwillingness of suppliers to sell, SteelOrbis observes. Both sides - sellers and buyers - are stating that there is demand for scrap in Turkey, while suppliers are not sharing many offers with buyers. “I have trouble finding an offer for deep sea scrap,” the representative of a Turkish mill stated. According to another source, “This is the first shock wave. Some of the tonnages sold via deals done for March shipments have not been fully collected, but prices are rising at a fast pace. Hence, things are complicated for the sellers.” With Turkey receiving demand for billets from foreign buyers and with its billet and slab orders from Ukraine and Russia canceled, its need for scrap tonnages is also rising. “Turkey may need more than its traditional monthly 35-40 deep sea cargoes for April shipments,” a source commented. As Turkish mills are focusing on billet production amid lively demand, the supply volume of rebar is expected to decrease, which has already begun to be reflected in local rebar quotations.
Although Turkey has not joined the sanctions against Russia, it is a big question whether the steel flow from Russia to Turkey can continue. Some market players state that it would be hard as Russia is now out of the SWIFT payment system. The willingness of vessels to sail to Russian ports is also questioned. On the other hand, some Asian countries have commented that they are not experiencing any problems in relation to their previous orders from Russia for now. Unfortunately, due to the severe damage done to Ukraine and its infrastructures, it may take some time for Ukraine to return to normal after the eventual end of the war.
