Turks bargain hard after low-priced US scrap deal

Posted on 29 August 2019

Source: Kallanish

A fresh US-origin deal has taken Turkish scrap import prices down yet further this week following their unexpected collapse at the end of last week. The optimism surrounding Turkey’s rebar sales to the US last week has faded this week on persistently weak demand.

The US cargo comprised 42,000 tonnes for September shipment, with HMS 1&2 80:20 priced at $270/tonne cfr Turkey and shredded at $275/t. This followed the US deal at the end of last week for 22,000t of HMS 1&2 80:20 at $276.5/t cfr Turkey, 20,000t shredded at $281.5/t and 3,000t bonus at $286.5/t. These compare to the previous US-origin deal before the Eid holiday at $290/t for HMS 80:20.

Although the supplier involved in the latest US-origin deal is not considered a major player or market maker, Turkish mills are using the cargo as a reference point in negotiations with merchants.

“Looking at September (shipment), there is still quite a number of enquiries – I don’t follow the logic for giving discounts,” a major European scrap merchant tells Kallanish. “The Turks have been out of the market for several weeks now and definitely need to replenish.” Moreover, Egypt is in the market for scrap, and scrap is cheap compared to rival steelmaking feedstock pig iron, he adds.

He is in talks with Turkish mills but they are bidding in the mid-$260s following the latest US deal, while he would not consider anything below the mid-$270s, he says.

Another European merchant says he is fully booked for September-shipment and therefore in no rush to sell. Suppliers are prohibited by collection cost from going much below current price levels, he adds. “$275/t is probably the right level,” he explains. “The Turks will attempt to take it lower… but as long as rebar prices remain where they are, they (Turkish mills) will have to compromise.”

A Turkish scrap agent says he expects to see scrap fall to $260/t. Mills do not want to pay prices above $270 “…because the finished steel sales side is not supporting scrap prices,” he observes. “On the other hand, scrap suppliers need to empty their yards… it’s not a good market.”

Turkish rebar export offers are at $445/t fob Turkey, with no sales heard this week. Traders say product is available at $440/t fob, with bids at $435/t fob.

One major steelmaker plans to shut down its rolling mill throughout September due to a lack of orders. A manager at the mill says he expects scrap to come down further as billet sales, which Turkish mills have recently used to offset weak rebar demand, have also now stopped. 

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