Turkey: Imported Scrap Prices Correct Marginally in Recent Trades

Scrap importers in Turkey have been observing range bound prices since last couple of weeks. Importers keep procuring material for October-November deliveries mostly from Europe and Baltic origin as offers from USA suppliers remain limited amid tight supply. Despite marginal correction observed in recent deals concluded, prices are likely to remain supported for next couple of weeks amid urgent need for scrap among steelmakers.

In the recent deal, a European-based merchant sold total 50,000 MT cargo to Marmara based steelmaker consisting of 20,000 MT HMS 1/2 (75:25), 5,000 MT Shredded, 7,000 MT HMS 1, 2000 MT Bushelling and 6,000 MT cut rebar scrap at an average price of USD 325/MT, normalizing to USD 326-327/MT CFR. Slightly stronger prices were heard for Baltic region scrap as compared with European scrap.

In couple of recent deals heard out of the Baltic origin, prices inched down USD 2-3/MT as against deals concluded earlier last week. A Baltic merchant sold a cargo to an Iskenderun-based mill comprising HMS 1/2 (80:20) at USD 329/MT CFR. Another deal confirmed comprising HMS 1/2 (80:20) at USD 328.5/MT, CFR.

According to SteelMint's price assessment, USA origin HMS (80:20) scrap inched down at around USD 329-330/MT, CFR Turkey as against USD 330-332/MT towards closing last week. While HMS 1&2 (80:20) for European origin heard at USD 323-324/MT, CFR, down USD 1-2 W-o-W.

According to reports, few suppliers still remain offering scrap at higher levels. German scrap exporter offered HMS 1/2 (75:25) at USD 325/MT, while a Baltic scrap recycler was heard offering HMS 1/2 (80:20) material at USD 335/MT CFR.

Outlook for prices towards end CY18 remains positive - Amid slowdown in collection rates affecting inflows in US and Europe yards towards end of CY18 prices are likely to stand firm on firm demand from South East Asian markets. Over the rise of USD 35-40/MT in the spread between Turkey HMS scrap import prices and rebar export prices so far in 2018 as against last year, Turkish mills have been able to increase their margins despite section 232 impact, currency dynamics and political instability.

Although bearish outlook for rebar market may put scrap prices under pressure for next 2-3 weeks, overall outlook could support scrap prices at longer run.

Steel mills struggle with poor finish steel demand - Steel mills in Turkey continue to struggle with poor demand for rebar and increased production costs, offers remain in the range of USD 495-500/MT, FoB Turkey, down USD 5-10/MT W-o-W. While wire rod export prices widened from USD 520-530/MT earlier to USD 515-530/MT, Fob Turkey