Turkish mills have made a cautious start to the week, after concluding numerous deep-sea scrap purchases last week, Kallanish notes. While their demand is not completely finished, they wish to gauge the situation in finished steel markets, China and geopolitics before committing to more purchases.
Scrap suppliers, however, have backed off in preparation for higher offer prices this week. While US suppliers are targeting $270/tonne cfr and above for HMS 1/2 80:20, European suppliers are seen to be targeting $265/t cfr and above for the same grade this week. Even short-sea suppliers, except Russia, are seen to be targeting $260/t and above after sales last week at $242/t cfr.
Although Kardemir sold more than 60,000 tonnes of billet and 50,000t of rebar on Tuesday, market participants have different thoughts regarding the reason for these sales. Some believe they are the result of the lira depreciation, while others say buyers are convinced of bottomed finished steel prices, thereby increasing demand.
A Turkish mill says: “Today, we are seeing a depreciation in the Turkish lira. Kardemir sells on Turkish lira. Moreover, it offers deferred payment. This brings an opportunity for the buyer. If there was a real demand increase in the Turkish market, we should have seen that in the İzmir and İskenderun regions, too, where rebar sales prices are lower. However, demand in these regions is still very stagnant.”
Another Turkish producer says: “For a long time I have not seen such high demand for Kardemir rebar. The downward trend in steel and raw material prices has come to an end, and there is an expectation for higher prices.”
Some market players believe an increase in scrap prices could accelerate rebar demand and lift prices. However, others say Turkey should not pay more than $245/t cfr for scrap in the current subdued rebar market where prices are depressed.
“Accepting higher scrap prices means accepting higher losses,” says a Turkish rebar producer.
Turkey’s involvement in Syria is meanwhile raising concerns among market players. Coupled with developments in China, the stagnant rebar market, and uncertain lira movement against the dollar, this makes it questionable whether Turkish mills will accept higher scrap prices.