Turkiye: Imported ferrous scrap index down by $2/t w-o-w; bearish price outlook amid weak steel market

Turkish imported ferrous scrap index declined by $2/t w-o-w as prices softened amid a growing bearish sentiment. The market pause and increasing backwardation in futures indicate expected price drops. A weak global as well as Turkish finished steel market has heightened concerns among participants.

Turkish mills favouring billet imports over scrap due to price levels exerting downward pressure on scrap prices. Scrap sellers now face a critical choice: maintain prices or offer discounts to secure deals. Market insiders predict intensified pressure on scrap sellers by Turkish mills in the coming week.

Despite weak finished steel sales, especially in export markets, Turkish mills continued to restock deep-sea scrap for late-August shipments. The cost for US scrap remained higher than European material by $5-6/t. Turkish mills are expected to book more scrap for late-August shipments, but purchases are anticipated to be slow due to the weak finished steel demand.

Market comments

As per a supplier side source, shredded scrap is priced around $340-350/t and HMS at $310/t from Germany and the Netherlands. Margins must include transportation and port handling charges. Dock prices remain stable due to limited restocking, as suppliers focus on Turkiye and other intra-EU regions, given bid-offer disparities with Asian buyers. Bulk offers from Benelux and other European regions hovered around $388-390/t, with potential deals at $386-387/t. Buyers are eyeing August and some September bookings.

Additionally, a recent surge in Egypt's demand for imported ferrous scrap is helping maintain firm scrap prices in Turkiye despite weaker steel demand. Gas supply disruptions in Egypt have increased the reliance on scrap-based production over DRI methods, which depend on gas. Without their demand, scrap prices would have fallen sharply by now.

Export rebar quotes remain weak, with offers at $580/t FOB for August shipment, slightly down from $582-585/t FOB a week ago.

Assessment trends

BigMint's assessment for US-origin HMS (80:20) bulk scrap stood at $389/t CFR, down by $2/t w-o-w.

BigMint's assessment for bulk HMS (80:20) from the US East Coast stood at $360/t FOB, down $2/t w-o-w.

Recent deep-sea scrap deals:

• Netherlands origin HMS(80:20) cargo was sold to a West Marmara region mill at $382.5/t CFR.
  
  
• US-origin HMS (80:20) at $390/t was sold to an Aegean region mill.
  
  
• US-origin HMS (80:20) at $390/t sold to a Mediterranean region mill.
  
  
• Northern Europe-origin HMS (80:20) at $388/t sold to a Mediterranean region mill.
  
  
• US-origin 30,000 t mix scrap (10,000t each of HMS (90:10), shredded, and bonus) at $392/t and $410/t sold to a Mediterranean region mill.
  
  
• Netherlands-origin HMS (80:20) at $383/t sold to a West Marmara region mill.
  
  

Domestic market:

This week, domestic auto bundles and ship scrap prices in Turkiye remained stable. An Izmir steel mill increased its buying price for local auto bundle scrap to TRY 12,900/t ($391/t) delivered, up TRY 600/t, to secure more material.

Other mills kept their buying prices flat. Domestic ship scrap prices also held steady at $370-385/t.

Turkish steelmakers continued to face slow rebar demand from local and foreign customers. Integrated mill Kardemir placed small rebar orders in the domestic market, maintaining lira-based prices from two weeks ago at TRY 23,460/t EXW. The dollar equivalent rose slightly to $595/t EXW due to a stronger national currency, with around 15,000 ?tonnes (t) sold locally. Other Turkish steel producers decreased domestic rebar prices by $5/t over the week to $580-610/t EXW, depending on the region, despite high production costs. Mills are forced to offer discounts amid sluggish trade, driven by insufficient demand and a money shortage in Turkiye.

Consumer confidence declines: Turkiye's consumer confidence fell in July due to high inflation and credit constraints. Car and home purchases improved but remained low. House sales dropped 5.2% yearly, with mortgage sales plunging 49.4%. Car sales decreased 6% in June.

Outlook: As per market experts, a near-term scrap price drop of $5/t CFR due to attractive billet prices offered to Turkiye. The bearish sentiment is driven by weak global finished steel demand, low Turkish finished steel demand (both domestically and for export), and recent billet price declines, an alternative for rebar production. A bulk quantity of billets has been imported by Turkish mills recently, expected to arrive in September. This will affect demand for early September scrap shipments. However, many EU recyclers are on holiday, keeping scrap supply low and prices firm. The lack of demand counterbalances the supply shortage. Until we see a demand-driven finished steel market, scrap prices are unlikely to rise or stay at current levels. The outlook is bearish unless global steel prices recover.