It is observed that Turkish steel mills continue to show demand for scrap, though their demand is not very strong. While Turkish steel mills have fallen behind significantly as regards their scrap purchases for November shipments, they continue to make price inquiries. But there are very few scrap suppliers in the market seeking to conclude deals, and those suppliers’ offers to Turkey are significantly higher than Turkish mills’ expectations.
Turkish mills’ rebar sales in their domestic and export markets are very slow and their rebar prices continue to fall. On the other hand, Turkish steel producers’ profit margins are also falling further as they receive high scrap offers from scrap suppliers. As a result, the gap between scrap and rebar quotations is now at $170/mt, which is the lowest level recorded the past year.
In the current week, ex-US HMS I/II 80:20 scrap offers to Turkey have exceeded the last week’s level of $327/mt CFR amid the ongoing strong demand in the local US scrap market and also due to the rises seen in domestic scrap prices in the US for the October-cycle, after three months of decreases. An ex-US offer in Turkey at $335/mt CFR has been heard for the same grade scrap but Turkish mills did not accept this level. Meanwhile, demand in the local European Union market is also strong, though inventory levels of most suppliers are not high.
Although Turkish steelmakers are observed to have turned to short sea suppliers to complete their immediate needs, fewer short sea scrap suppliers are currently in the market, while their offers for Russian and Romanian A3 grade scrap to Turkey have increased to $325/mt CFR and $320/mt CFR, respectively.
It is believed that Turkish mills may limit their production rates if they refuse to accept this rise in scrap quotations which reduces their profit margins further.