After concluding their most recent bulk scrap purchases in the final week of April, Turkish mills’ demand for scrap has declined significantly since the beginning of May. It is observed that Turkish mills are still very reluctant to conclude new scrap purchases, while at the same time they are continuing to exert downward pressure on prices.
As deep sea HMS I/II 80:20 scrap deals concluded in Turkey last week were at $345/mt CFR, most suppliers in the Baltic region are trying to maintain this level in the current week, while Turkish steel mills’ price ideas do not exceed $340/mt CFR. The significant depreciation of the Turkish lira against the US dollar has caused domestic rebar prices in Turkey to increase above TRY 3,000/mt, including VAT, despite the sluggish demand in the market. Although domestic rebar prices have risen on Turkish lira basis, they have declined to $545-560/mt ex-warehouse on dollar basis due to the fluctuation of the exchange rate, causing the margins between scrap and rebar prices to shrink. This situation has led Turkish mills to increase their downward pressure on scrap prices, while it also widens the difference between prices of prime grade scrap for which there is strong demand in the US and Europe and prices of cut grade scrap which is consumed in higher tonnages in Turkey.
On the one hand, Turkish steel producers are going through difficult times due to the stagnaation of finished steel demand ahead of the snap election to be held in Turkey in June. On the other hand, it is becoming harder for them to predict the future trend of the market as the outcomes of the trade investigations in the international market are still unknown, while some positive progress has been seen in the trade negotiations between the US and China. While Turkish steelmakers continue to exert pressure on scrap prices by maintaining a very cautious stance as regards deep sea scrap purchases, the strong scrap demand in the US and Europe is making it difficult for them to achieve their desired prices. As a result, they continue to conclude short sea scrap deals. In the most recent transaction for Romanian A3 grade scrap in Turkey, the price was at $330/mt CFR Marmara. SteelOrbis has also been informed that Russian A3 grade scrap offers to Turkey are now at $335-338/mt CFR.