Turkish scrap market freezes, prices remain under pressure

Posted on 04 March 2020

Source: Kallanish

Turkish mills are observed to have continued to stay out of the scrap market so far this week. While there is almost zero demand for imported scrap in Turkey, imported scrap suppliers have also backed-off while waiting for scrap demand to resume.

Several factors are preventing Turkish mills from gauging the future of finished-steel demand. These include the fast-spreading coronavirus, increasing tension in Syria, the further depreciating Turkish lira, slowed domestic finished steel demand, stagnant export demand and China’s increasing steel exports. Turkish steel producers, as a result, are not rushing to buy April-shipment scrap cargoes, with some respite after having completed March shipment purchases.

In the absence of scrap demand, scrap suppliers are seen to have refrained from circulating their offers and price levels but continue to express the availability of their cargoes. This is mainly because they know that Turkish mills have no interest in buying scrap and will push further whatever price they offer. 

There is a rumour of a European-origin scrap deal circulating in the Turkish market but the suggested seller has denied the deal. 

“As we are approaching the spring, it is unlikely that we will face a problem with scrap availability. Thus, [… there is] no need to rush to buy scrap before having a clearer picture of finished steel demand,” a source at a Turkish mill tells Kallanish.

”Domestic finished-steel demand has almost halted. We have been unable to sell rebar to our export markets after increasing rebar prices. How can we afford high scrap prices when unable to reflect that in our finished-steel quotes? The scrap-rebar spread is at the tightest levels,” another Turkish mill contact, with a more pessimistic outlook, comments.

Although no definite offers are heard in the market, Turkish mills are not expected to accept prices over $270/t and $265/t cfr, for US/Baltic and EU origin HMS 80:20 respectively, under current market conditions.

The short-sea scrap price which has seen a sharp decrease and had fallen from $275/t cfr the week before to $265/t cfr last week, is not expected to find a buyer at $265/t cfr. It is considered that Turkish mills would not accept prices over $260/t cfr. 

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