With new deals heard from Europe and the US, Turkey’s import scrap market has returned to the levels recorded in early May. While most players believe Turkey’s economic situation remains uncertain, Turkish mills are also seeking deep sea scrap for June shipment. The current silence in the market is the result of the different price ideas of buyers and sellers, which is pushing scrap prices up slightly.
An Izmir-based mill has concluded an ex-US deal for HMS I/II 90:10 scrap at $380/mt CFR, shredded scrap at $398/mt CFR and bonus grade scrap at $398/mt CFR, for June shipment. The total tonnage is expected to be around 30,000-35,000 mt for this cargo. Based on the shredded scrap price, HMS I/II 80:20 scrap is estimated at $378/mt CFR, higher than the previous levels of $375-375.5/mt CFR in transactions.
An ex-Germany booking has also been done by a Black Sea-based Turkish producer, with the HMS I/II 80:20 scrap price at $380.5/mt CFR, again for June shipment. Although this level is $11.5/mt higher as compared to the previous deal price, the freight for this producer is also approximately $3/mt higher than for the Marmara region. Nevertheless, this price supports the idea that collection prices in the EU do not allow a sufficient margin for European sellers to reduce prices.
Today, May 25, a European scrap exporter stated that it is not possible to sustain scrap flow to yards with prices standing at €300/mt DAP. “Sub-collectors are asking for €310s/mt DAP. Lower than this level, flow is very slow,” the exporter commented. This comment supports a Germany-based sub-collector’s statement earlier this week; “Our own collection is at around €270-280/mt delivered. With the additional inland freight for export yards, it is better for us to collect and wait for a price increase instead of selling the material right now.” Several German sub-collectors reported that they are inclined to increase their stock levels for now. On the other hand, Germany has technically entered a recession according to the recent data, meaning manufacturing sectors may struggle to keep up the pace of their activities in the coming period. Having failed to lower their collection prices, European scrap exporters are not willing to accept current levels for Turkey if it means another loss in sales. Meanwhile, a decline in the local US scrap market is expected for the June buy-cycle. The extent of next month’s drop, however, is expected to be largely region-based, with some areas, such as Chicago, anticipated to have steeper dips in prime scrap prices compared to other parts of the country. As SteelOrbis reported previously, US-based market players pointed out that sheet steel pricing, including spot market prices for HRC, is still on a downtrend which is expected to last through the fourth quarter. While SteelOrbis hears that there are some scrap sales done from Europe, the US and Venezuela to the Indian sub-continent, it is also known that the import scrap market in Bangladesh has continued to remain in a lull during the past week given still slow finished steel demand coupled with problems with opening letters of credit (LCs). Although foreign suppliers of shredded scrap have stopped increasing prices to Pakistan, most Pakistani buyers have continued to follow a wait-and-see stance. Most regional customers are delaying new scrap bookings as the business environment in the finished steel segment has remained unfavourable. The same can be seen in Asia, due to the significant falls observed in the Chinese futures markets. Iron ore spot prices are once again below the $100/mt CFR mark, which was last seen in November 2022. A Turkish mill commented, “The correlation between raw materials and finished steel is once again disrupted.” Despite the decline in import billet quotations, the same mill stated, “The new reduced import billet prices are not providing enough margins for Turkish mills if we consider the rolling costs of rebar and the Turkish lira-US dollar exhcange rate.” Having said that, SteelOrbis observes that there are several mills in Turkey that are actively seeking scrap. There are more than enough scrap cargoes if the parties can agree on the price, though it would be safe to say sellers are expected to ask for higher levels in the coming period. Turkey continues to need scrap for June shipment, requiring around 10 more cargoes. A Baltic scrap seller said, “There is little time to conclude these bookings, with only six days left for May to end.” Many players SteelOrbis surveyed today said they think that a sudden price rise may be seen when Turkey fully returns to the market for deep sea scrap cargoes, though no one is sure about how long such a rise would last. For now, European HMS I/II 80:20 scrap is at $380s/mt CFR Turkey, while US-based suppliers are expected to ask for $385-390s/mt CFR in the coming negotiations.
Due to the fluctuating Turkish lira-US dollar exchange rate, traders are worried another depreciation of the lira will happen after the second round of the presidential election to be held on May 28. Some players are restocking rebar as they did before the first round of the elections, though tonnages are not so high this time. This is creating a movement in the market, but most Turkish players consider the real exchange rate stands at TRY 21 and above to the dollar. Since it is very difficult to procure foreign currencies in Turkey, a quick recovery after the election is not expected. However, the delayed rebuilding efforts in the earthquake-hit cities are expected to quicken after the election. “This will cause the finished steel demand received from the region to increase,” a trader said. It should be recalled that Iskenderun-based mills are still mainly buying domestic scrap and need very few deep sea cargoes as compared to the pre-earthquake period.