Turkiye: Imported bulk ferrous scrap index rises by $6/t w-o-w; firm price outlook amid supply shortage

The Turkish imported ferrous scrap index rose by $6/tonne (t) w-o-w as sellers maintained firm offers, sensing that mills were short on scrap supplies.

In August, Turkish steelmakers secured at least 20 deep-sea scrap shipments. Similarly, BigMint's vessel line-up tracker indicates bulk scrap volume of 1.35-1.4 million tonnes (mnt) imported in August, slightly below July's total.

Most of these cargos are scheduled for late September and early October.

At the beginning of August, the Turkish import scrap market slowed due to pricing uncertainties. With substantial volumes of import billets already secured for September, producers remained cautious about committing to scrap purchases, seeking discounts. Mills had the advantage of time, while global steel and raw material prices were pressured by negative sentiment from China.

Scrap exporters faced weak demand from Turkiye, India, and Pakistan, leading to a reduction in dock prices. From the last week of August to the present, US East Coast HMS (80:20) prices have slowly rebounded by $10/t, rising from $332 to $342/t.

Market Commentary

A US supplier said that Turkish mills are currently short on material, with their scrap-to-rebar margin stabilising, supported by US-origin HMS (80:20) offers at $370-375/t CFR. The US sell-side remained firm, with tradable values for US/Baltic-origin HMS (80:20) mostly around $370-372/t CFR.

An EU supplier said that Turkish rebar export prices edged up as mills maintained higher prices due to sufficient order volumes. Demand in Northern Europe improved following the holiday period.

The supplier added that scrap generation is significantly slow, causing a shortage of feedstock for Turkish Electric Arc Furnaces (EAFs).

"Although the Turkish finished steel market has been sluggish due to the summer holiday, we anticipate a modest recovery as participants return. However, recent steel billet purchases from Asia could limit any significant rebound in demand or prices. Billet deliveries to Turkey are expected to peak in late September and October, which may influence overall market conditions," a Turkish scrap buyer commented.

A US recycler mentioned that with current prices at $368-370/t CFR to Turkiye, selling now makes little sense, as they plan to wait for the US domestic market to stabilise before considering exports. On the other hand, some recyclers anticipate a decline in settlement expectations across most US regions, with limited upside potential.

Overall, sentiment in the US's domestic scrap market is low with a drop in shredded scrap prices to $20/t in most regions, though HMS (80:20) prices are at their low point and unlikely to fall further--HMS(80:20) prices remained steady at $310/t delivered Midwest and $330/t delivered Southeast. The supplier also noted that tight HMS flows in the US are contributing to higher export prices.

The US market may be stronger than initially expected. US mills are expected to begin buying for September bookings.

Firmer seller targets in Europe are a result of increasing HMS collection costs in the Benelux region. Indicative offers for EU-origin HMS(80:20) are at $365-370/t CFR, with a bid of $360-363/t CFR which did not materialise. HMS collection costs in the Benelux region were reported at euro 290-295/t delivered to the docks.

Around 5 deals were booked during the last seven days, three are from the US and two is from Europe, and deal prices were ranging from $363 to $371/t on a CFR Turkiye basis.

Assessment trends

• BigMint's assessment for US-origin HMS (80:20) bulk scrap stood at $370/t CFR, up by $6/t w-o-w.
  
  
• BigMint's assessment for bulk HMS (80:20) from the US East Coast stood at $342/t FOB, up by $6/t w-o-w.
  
  
• The scrap-to-rebar spread was assessed at $200-202/t as rebar FOB price is at $572/t, narrowed down from $206-210/t as compared to last week.
  
  

The Turkish billet market was quiet recently, with local offers rising to $535-550/t exw up $5-7/t. Despite this, buyer interest remains low due to difficulties in the long steel trade as per a semis producer.

Kardemir's ongoing billet sales could offer $505-510/t exw for bulk purchases. Ex-CIS billet for October-November shipment is offered at $485-488/t CFR Turkiye, while Chinese semis are at $490-492/t CFR. Far Eastern billets are available at $500/t CFR Turkiye. Recent price increases from China may not last, leading many to hold off on buying as per sources.

Turkiye's automotive sector achieved strong sales in August, reaching a historic high with 90,134 units sold, marking a 0.8% y-o-y increase. Of these, passenger car sales totalled 69,288 units (up 0.2%), while light commercial vehicle sales stood at 20,846 units (up 2.6%). From January to August 2024, total sales rose to 762,152 units, a slight increase of 0.2% compared to the previous year. Passenger car sales grew by 3% to 605,639 units, while light commercial vehicle sales declined by 9.5% to 156,513 units. Foreign vehicle imports increased by 9.6% to 538,786 units, whereas local transactions fell by 17% to 223,366 units. Electric vehicles accounted for 8.4% of total sales, up from 4.8% in 2023.

Outlook: According to market insiders, Turkish buyers are targeting a price range of $368-372/t CFR for deep-sea HMS (80:20) from the EU and the US. However, supply constraints on the seller's side are expected to push prices higher in the near term.