Turkish buyers continue to exert pressure on scrap prices

Tuesday, 06 August 2019 17:50:21 (GMT+3)   |   Istanbul

Although no bookings have been heard in the scrap market over the past week, buyers have continued to exert pressure on prices of scrap. It is heard that price inquiries have started to be made this week ahead of the Feast of Sacrifice holiday but no improvement in demand has been observed yet. Market sources state that Turkish steelmakers' price ideas for import scrap purchases are at $280-285/mt CFR Turkish port for HMS I/II 80:20 scrap.

In the deep sea market, US scrap suppliers are observed to be reluctant to bid and to reduce their prices to Turkish mills’ desired levels. On the other hand, the increases recorded in the local US scrap market may give the advantage to US scrap suppliers who are already unwilling to conclude export sales. Although no new ex-US scrap offer to Turkey has been heard in the current week, it is thought that US scrap suppliers' offers for HMS I/II 80:20 will be in the range of $295-300/mt CFR Turkish port.

Meanwhile, SteelOrbis has been informed that European scrap suppliers’ HMS I/II 80:20 scrap offers are currently at $290-295/mt CFR Turkish port as Europe enters its holiday period. On the other hand, scrap flow has slowed down due to the holidays in question. In addition, it is reported that ex-Baltic HMS I/II 80:20 scrap offers are in the range of $290-295/mt CFR Turkish port. A Russian scrap supplier in the Baltic market stated, “We still don't bid under $295/mt CFR. Those who bid below this limit have their own reasons.”

It is observed that ex-Romania offers for short sea scrap are moving down. On Friday last week, a mill in Turkey’s Marmara region concluded an ex-Romania deal for a total of 10,000 mt of HMS I/II 80:20 scrap at $275/mt CFR Turkish port. Thus, ex-Romania scrap offers have declined to $275-280/mt CFR Turkish port for HMS I/II 80:20 scrap. Although market sources report that some Russian suppliers are offering lower than $290/mt CFR Turkey for HMS I/II 80:20 scrap from Black Sea ports, most Russian scrap suppliers prefer not to drop below this threshold.

Turkish mills want to see how scrap market will be impacted by the fall of iron ore prices, which have trended below $100/mt CFR Chinese port in the past several days. On the other hand, having reduced their rebar offers to $455-460/mt FOB due to weak demand, Turkish mills are citing this weak demand as the reason for their pressure on imported scrap prices.

Business activity in the segment is foreseen to remain limited until the end of the holiday period. Market players mostly do not expect any major price reduction from the scrap suppliers’ side. “I don’t think that scrap collection prices are supporting $280-285/mt CFR to Turkey,” a trader said. “If mills foresaw significantly lower scrap deals, they would have probably gone for rebar sales at $450/mt FOB and below,” another source believes.

Some market sources expect some slight decrease in crude steel production in Turkey in August compared to the previous three months, which will result in lower scrap imports. In particular, according to some expectations, the total scrap import volume in the current month will be below one million mt.

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