An older scrap deal from earlier this week has surfaced in the market, indicating that ex-UK/EU scrap prices for Turkey have softened a little. Sentiment in Turkey’s import scrap market has changed over the current week from a firm sideways movement to a softer trend, with Turkish mills starting to exert pressure on deep sea scrap offers. Meanwhile, Turkish mills will have to make decisions regarding capacity utilization rates and maintenance works in the light of reports of a likely earlier-than-expected hike in energy prices.
SteelOrbis has learned that the ex-UK cargo was sold to Iskenderun on Monday, May 18, with the HMS I/II 80:20 scrap price standing at $406/mt CFR. Before this deal, SteelOrbis’ reference price for the ex-UK/EU scrap was at $408/mt CFR, with a drop of $1/mt on average now seen.
Market sources report that sellers are not aggressive in their scrap offers to Turkey, though there are plenty of available cargoes that can be offered for shipment in the second half of June. “I am not sure whether Turkish mills would show interest in them immediately as they are expecting a hike in energy prices in June,” a source commented. The Turkish government had been expected to increase energy prices in July due to the ongoing energy crisis against the backdrop of the Iran war. However, during the past week expectations have emerged for a hike in energy prices in June, SteelOrbis hears. “Higher energy prices mean Turkish mills’ margins will shrink further. A strategy to produce now at lower cost and then to announce maintenance works in the coming period makes sense to me,” a source commented. A source at a Turkish mill said, “I agree that higher energy prices will add more challenges for mills, though lower scrap prices also mean end-users will exert pressure on finished steel prices. This is the dilemma. I am not sure whether Turkish mills would love a decrease in deep sea scrap prices in the short term.” A soft sideways price movement can be expected for Turkey’s import scrap market for now, as freight costs have stabilized somewhat, the euro is depreciating and finished steel demand remains stagnant in Turkey, and also due to the declines observed in the Chinese market.
