While Turkey’s import scrap market is set to decline with new deals, the sentiment in the overall steel market is very pessimistic. Turkish mills have completed their immediate needs for deep sea scrap cargoes to shipped in July, and Turkey has a week-long Feast of Sacrifice holiday next week. While Turkish mills are known to be buying scrap during holidays in a normal time, this one is expected to be silent.
As of today, SteelOrbis will cut its deep sea scrap prices down by $5/mt for all the grades, the general range for HMS I/II 80:20 scrap will be revised to $378-385/mt CFR Turkey. Although there is higher pressure on prices, with some mills even voicing bids at high $370s/mt CFR for ex-US material, for the rest a new confirmed deal will be waited. Again, it is best to remember that Turkey will be back on July 3 and will start buying cargoes for August shipment. Depending on Turkey’s rush to buy August shipments, the decline of deep sea scrap prices can be narrow.
For the short sea scrap segment, the cut will be $10/mt week on week. There are ex-Romanian deals done by some Turkish producers this week at around $355-360/mt CFR. For prompt shipments, market sources agree there is potential of a further decrease on short sea segment.
Following Turkey’s Central Bank decision to increase interest rates to 15 percent from 8.5 yesterday, June 22, Turkish lira has depreciated to 25.46 to a dollar. While this makes sense if one considers the initial expectations for the new interest rate varied around 25-30 percent, the first response of Turkish mills was to close their domestic sales. Today, some of the mills announced new price lists at $640-650/mt ex-works. Yesterday, in an online event organised by Turkey’s Foreign steel Trade Association, it was said that domestic production rates all around the world is rising, with many competitors of Turkey having an advantage in production, “some has energy cost advantage, some raw materials”. Therefore, Turkish steelmakers are forced to focus on their domestic market, their price flexibility is lower for exports. “With the Central Bank leaving its low interest rate policy contributed by the slowdown in real estate market and in credit mechanism, we will feel the impact significantly in Turkey,” Emrah Uğursal from Bastug Metalurgy said in the meeting who also indicated that the main problem for Turkish mills is not the scrap price but that the domestic production capacity of mills is very high as compared to the local steel demand.