Turkiye: Imported bulk ferrous scrap index rebounds by $4/t w-o-w; buyers cautious amid firm price outlook

The Turkish imported bulk ferrous scrap index has rebounded from a low of $360/tonne CFR, with firmer offers now reported at $368-370/t from the US, indicating a sellers' market.

In the past seven days, around four bulk shipments--mostly from Europe and one from the US were booked within a price range of $355-364/t CFR Turkiye. The sell-side market sentiment is strengthening further as the shortsea-deepsea price spread narrows and mills showed increased interest in ferrous scrap. As a result, Turkish deepsea imported ferrous scrap prices have edged higher.

Suppliers suggested that $360/t CFR was achievable given the last collection costs but it has increased due to strengthening Euro. However, many sellers are holding onto cargo to sell at higher prices, and those with the financial capability are likely to wait for better market conditions. Consequently, the market currently favours sellers.

Conversely, market insiders suggested that scrap sellers are likely to push for higher prices as China's recovery gains momentum and market pressures ease. Offers for US and Baltic-origin scrap have been noted in the range of $365-$368/t CFR. With the short-sea market now at $360/t CFR and the spread between short-sea and deep-sea scrap narrowing to just $4/t, which is driving this shift along with the strengthening euro, signs of economic recovery from China, and increased demand from mills.

Earlier sales may have suggested a "sharp drop," potentially misrepresenting the overall market sentiment, which has been trending downward throughout August.

Assessment trends

• BigMint's assessment for US-origin HMS (80:20) bulk scrap stood at $364/t CFR, up by $4/t w-o-w.
  
  
• BigMint's assessment for bulk HMS (80:20) from the US East Coast stood at $333/t FOB, up by $3/t w-o-w.
  
  

The scrap-to-rebar spread was assessed at $206-209/t FOB, narrowed down from $215-217/t as compared to last week.

A Turkish buyer said that mills need scrap but offers were limited, with attempts to push prices down to $355-$356/t CFR proving unsuccessful.

An EU recycler reported that HMS collection costs in Benelux were at Euro 275-280/t ($305-310/t) delivered to docks. The recycler added that a strong euro is squeezing margins and complicating efforts by mills to achieve price reductions. European recyclers are finding it difficult to lower dollar-denominated scrap prices.

In the context of international trade, a stronger euro can make European exports more expensive for buyers using other currencies, while imports into the Eurozone become cheaper. For recyclers and mills dealing with scrap priced in dollars, a stronger euro can squeeze margins, as the cost of purchasing dollar-denominated goods effectively increases in euro terms.

Recent deals

• A U.S.-origin supplier sold bulk cargo comprising HMS (80:20), shredded, and bonus scrap at $363/t, $383/t, and $383/t CFR Turkiye, respectively, to an Aegean region-based mill.
  
  
• A Netherlands-origin supplier sold the bulk cargo to an East Marmara-origin mill comprising HMS (80:20) and shredded at $359.5/t and $379.5/t CFR Turkiye.
  
  
• A Swedish supplier sold a bulk cargo with HMS(80:20) at $363.5/t to a West Marmara region-based mill on a CFR Turkiye basis.
  
  

Market driver: The stable seaborne iron ore prices, alongside high port stock levels, may limit a sharp increase in global scrap demand. However, cautious buyers and potential iron ore price fluctuations could lead mills to maintain or slightly increase scrap usage as they hedge against market uncertainties.

Outlook: Turkish buyers report that sellers are holding onto cargoes in anticipation of upcoming price increases and believing that deepsea ferrous scrap prices may have bottomed out, supported by the strength of the shortsea market and limited supply from nearby regions such as Bulgaria and Romania. Mills have been aiming to bring down prices to $350/t CFR for deepsea HMS (80:20) but the resilience of the shortsea market and the difficulty in substituting deepsea imports are expected to drive a rebound in scrap prices in the near term.