The import scrap market in Turkey experienced a lively period in terms of deep sea scrap purchases in the first half of June for July shipments. It is now observed that purchases for July shipments have almost been completed. In the meantime, market players share different opinions regarding the round of purchases for August.
At the end of May, SteelOrbis had reported that Turkish steelmakers bought approximately 40-42 deep sea cargoes for June shipment, and this was interpreted as meaning that the Turkish mills had positive expectations for their production and business at that time. Also, the general opinion in the market was that Turkey would conclude around the same number of deep sea bookings for July shipment.
Now that we are closer to the end of June, it is estimated that Turkish producers have bought at least 35 deep sea scrap cargoes for July shipments, which is very close to the number recorded for the previous month. Some market sources think that there is room for an additional five to six cargoes for July shipment. The Turkish government’s measures have supported the sentiment in the local steel market. Some have considered the high volume of scrap imports to be a signal that mills are increasing their production rates since there was delayed rebar demand in the local market. Rebar exports, on the contrary, remain limited and are not likely to increase significantly anytime soon. In the flats segment, HRC exports have been under pressure from EU protectionism.
Traditionally, Turkey’s scrap imports for August shipments reflect some slowdown compared to June-July. However, this year market players have been finding it hard to make predictions, taking into account Covid-19, trade restrictions and the somewhat different rules of the game. Since exports are considered to be not sustainable for now, a lot will depend on Turkey’s domestic demand for both flats and longs. Some market sources expect that on the rebar side the general capacity utilization rate will reach 60-65 percent versus 40-55 percent back in the April-May period. Currently, Turkish mills are observed to be taking a step back to evaluate the scrap market, as they are not under pressure to conclude deals for August. In addition, deep sea scrap prices have softened in the ex-US booking (for August shipment) disclosed to the market today, June 18, which may signal softer scrap pricing.
Meanwhile, import scrap supply volumes are defined as sufficient in the key supplying locations. In the US, where supply flow was disrupted due to the pandemic, the situation is getting back to normal. Meanwhile, the fluctuation in the euro-dollar exchange rate has attracted interest as it influences the collection costs of European suppliers as well as impacting Baltic-based sellers that are collecting material from the European region. Additionally, the manufacturing sectors are gaining pace in the EU but, due to the approaching holiday season, this acceleration is not expected to make a significant impact on the scrap supply available to exports. Most sources agree that supply and demand in the import scrap market in Turkey is more or less in equilibrium at present.
