Posted on 10 Jan 2023
Turkish hot rolled coil producers continue to increase prices, in line with ascending ferrous scrap sentiment and despite abundant lower-priced Asia-origin material availability.
The latter resulted in significant Chinese HRC volumes being sold in Turkey in the last fortnight. Turkish capacity utilisation remains at around 50%, but prices are rising quicker than buyers can confidently accept them and push utilisation up, Kallanish notes.
Turkish HRC prices increased by around $100/tonne on-month and $20/t on-week to $700-740/t ex-works last week. Having sold significant volumes at lower, $700-720/t ex-works levels in earlier weeks, some offers rose to $730-740/t ex-works towards the end of last week, and higher, in rare cases, to around $750/t, with shorter lead times. This came from the mill that claimed to have sold out of February allocations, which are traditionally lower due to the length of the month, but also because capacity utilisation remains in check.
Should more sales come, mills are ready to consider increasing their planned output, but there is awareness of a delicate balance in the market, with plentiful imports, which is curbing increases, market sources say. Those import purchases, mainly from China, are widely estimated to total up to 200,000 tonnes, although several sources note this volume is exaggerated and includes arrivals from previously made deals.
Regardless, even at 100,000t in a fortnight, it is a high enough volume relative to demand to constrain more domestic trade. At $635-650/t cfr, these prices are hard to beat by Russian or other Asian suppliers. The former was not seen in the market due to holidays and considerably strong domestic demand, while the latter offered in the range of $660-700/t cfr, with Southeast Asia at the lower end and India the higher. Some sales were heard at the low end of the range.
After a very quiet fourth quarter, demand perked up on scrap prices settling at higher levels, with expectations of further increases, and lowered power and gas tariffs reducing costs along the production chain. Re-rollers and galvanisers were anxious to secure material before further rises, as demand for their products has also finally started to thaw.
In the export market, Turkish mills' offers rose at an equivalent pace, to around $700-720/t fob depending on the mill. However, small sales were secured at around $650/t fob base, with indications from sellers that discounts could be available to buyers in the EU and Middle East and North Africa. Asian competition remains, however, and European demand is still to demonstrate a firm recovery, traders note.
Source:Kallanish
