Turkiye: Imported ferrous scrap index down $1/t w-o-w; bearish outlook as buyers prefer cheaper billets

Turkish imported ferrous scrap index witnessed a declining trend as in the last week of July 2024, Turkiye's scrap market remained inactive, with only previously concluded deals being reported. Slow negotiations in the ferrous scrap sector were seen with no fresh deep-sea deals being heard.

Turkish mills are holding off due to the sharp decline in billet import prices and persistently high scrap prices. Turkish mills have been delaying purchases due to stagnant rebar demand in both local and export markets. Scrap suppliers are maintaining firm price positions due to limited supply, resulting in price stability.

As regards supplier-side sentiments, despite a mostly bearish scenario deals are being concluded at largely stable prices and participants need to watch how the market unfolds in the coming weeks.

Over the past weekend, an Iskenderun-based steel producer secured HMS (80:20) at $386/t CFR and shredded or bonus material at $411/t CFR from a French exporter followed by unconfirmed deals including HMS (80:20) at $382.5/t CFR from Europe and $388/t CFR from the Baltic region.

Assessment trends

• BigMint's assessment for US-origin HMS (80:20) bulk scrap stood at $388/t CFR, down by $1/t w-o-w.
  
  
• BigMint's assessment for bulk HMS (80:20) from the US East Coast stood at $359/t FOB, down $1/t w-o-w.
  
  

The drop in prices was due to lower collection costs in the Benelux region, which were cited at Euro 310-315/t delivered to docks, though some exporters continued to pay up to Euro 320/t.

Export offers for rebar remain largely stable at $580-582/t which kept scrap-to-rebar spread at $191-192/t FOB, range-bound compared to last week.

Record low Chinese billet import price in 2024

Turkish steelmakers have secured Chinese steel billets at a 2024 record low of $482-485/t CFR, with an Izmir mill purchasing 50,000 t for mid-October delivery. Another Marmara mill also acquired Chinese billets, though the exact details remain undisclosed. This week's trades included billets at $480-485/t CFR for 45,000-48,000 t and around 50,000 t, respectively, down from last week's $500-505/t.

Turkish mills are anticipating 500,000 t of Chinese and Southeast Asian billets to arrive in September and October, equivalent to about 16 deep-sea scrap cargos. This influx has led to a 15% reduction in August's deep-sea scrap purchases compared to July, influenced by billet availability and seasonal factors.

As a result, Turkish buyers have bid $380/t CFR for European HMS (80:20) scrap, driven by supply concerns and reduced US scrap availability due to hot weather. European domestic scrap prices are expected to decrease in August after remaining stable or increasing slightly in June and July.

In Germany and Spain, domestic scrap prices have recently declined modestly due to lower mill activity and increased supply. Turkish buyers are managing their bids carefully to secure supply without deterring sellers, while European exporters face pressure from falling domestic prices and competitive international offers.

Isdemir, part of OYAK Mining Metallurgy Group, was awarded for its "Isdemir Special Industrial Zone Port Capacity Increase and Sustainability Investment" project at the HIT-30 High Technology Incentive Programme. This project enhances maritime transport with five docks and a liquid cargo dock. The HIT-30 programme, introduced by President Erdogan, aims to boost high-tech sectors like electric vehicles and renewable energy by 2030. Isdemir, with a steel production capacity of 5.3 million tonnes per year, was honoured for its role in advancing Turkiye's logistics and sustainability efforts.

Turkiye and GCC states have officially launched the first round of free trade negotiations, held in Ankara from 29-31 July. The talks focus on increasing investments, reducing customs duties, and improving market access.

Following initial negotiations in Ankara, the discussions, initiated in March, focused on various economic sectors and will continue online, with a second round in Riyadh later this year.

This effort follows the resolution of tensions with Saudi Arabia and the UAE in 2020.

Notably, Turkiye's trade volume with the GCC reached $31.5 billion in 2023.

A successful Free Trade Agreement (FTA) could create one of the world's largest free trade areas, valued at $2.4 trillion. While Turkiye sees this as a chance to boost trade and investment, GCC steel market participants remain sceptical, noting existing local industry protections and growing ties with Chinese firms.

Turkish companies, such as Tosyali Holding and Kocaer Steel, are keen to reestablish a presence in the GCC region.

Additionally, the UK plans to resume trade talks with Turkiye after a pause due to the general election.

Outlook: Market insiders are closely watching Turkiye, as Chinese billets capture market space. This pricing trend is expected to influence buyer activity, which is likely to remain moderate in the coming weeks due to bearish market sentiment. Scrap prices are expected to soften as steel mills take advantage of cheaper billet sourcing. This week has seen no major bulk deal, with September's scrap purchases also expected to decline due to lower US supply and other market shifts.