Turkish mills gauge market before making scrap purchases

Posted on 06 January 2021

Following a quiet last week of 2020, Turkish mills have had a cautious start to the new year in terms of imported scrap purchases. No imported scrap bookings have been heard since 23 December.

Due to the silence in the market, a Baltic-origin supplier is heard to have panicked last week and offered HMS 1&2 80:20 at $466/tonne cfr Turkey. This price is lower compared to the latest US-origin HMS 80:20 booking at $473/t cfr and Baltic-origin HMS 80:20 booking at $470/t cfr. After seeing no interest from buyers last week, the seller is heard to have backed off and decided to wait.

While Turkish mills expect to see a downturn in prices as a result of their withdrawal from the market, scrap suppliers believe mills will have to face higher prices on their return.

US domestic scrap prices are expected to start settling at a minimum of $50/t higher in January trading. On the other hand, European mills are struggling to source scrap, even at €30/t ($37) higher prices. Dock prices have increased to €335-340/t delivered in the EU.

Baltic and short-sea suppliers are meanwhile encountering problems in sourcing material they have agreed contractually to sell. This, coupled with China’s entrance into the seaborne scrap market, Russia’s scrap export tax, strong iron ore prices and the continuing imbalance in scrap supply and demand, point to firmer scrap prices in the near term.

A Turkish rebar producer tells Kallanish: “Sales are too slow. Although a hot rolled coil producer can easily afford current scrap prices, a rebar producer may have to accept a loss. These are hard times for rebar producers.”

Turkish mills are waiting to see post-holiday developments in finished steel markets before starting scrap purchases, Kallanish observes. Although HRC and wire rod producers are almost fully booked until end-March and have larger margins, rebar producers are seen struggling to sell at current scrap costs.

Only one notable sale has been heard in the last two weeks. A Turkish mill sold 20,000 tonnes of rebar to Peru at $698/t cfr, including all production extras, last week. This equates to approximately $635/t fob, excluding extras. Turkish mills’ export offers stand at $640-660/t fob. Rebar demand in the domestic market, meanwhile, is yet to recover and is exerting pressure on prices.

No downturn is foreseen under current conditions, with the market expected to resume where it left off last year, at worst.

Source : Kallanish