Turkiye: Imported ferrous scrap market sees moderate trades w-o-w; Outlook gloomy

The Turkish imported ferrous scrap market witnessed moderate trades whereas prices increased in deals. However, uncertainty in the market looms due to a significant increase in interest rates announced by the Turkish central bank.

The price gap between rebar and scrap in Turkiye remains steady at $200-205/t on higher FOB prices for rebar, ranging from $585-590/t FOB, up from the previous week's $575-580/t FOB. Notably, local rebar prices hover around $595-600/t EXW.

US-origin bulk HMS 1&2 (80:20) prices edged up by $2/t w-o-w to $374/t CFR, up by $24/t compared to last month's $350/t.

The monetary policy committee of the Turkish central bank has taken the decision to substantially hike the policy rate - specifically, the one-week repo auction rate from 17.5% to 25%. This strategic move is aimed at curbing inflation, which rose to 47.8% in July, up from 38.2% in June.

Activities paused mid-week due to a national holiday. Scrap collectors remain firm on limited material availability and they expect improved scrap demand in September.

Recent deals:

• A West-Marmara-based mill secured a US-origin cargo, including HMS (80:20), at $374/t, shredded scrap at $394/t CFR, and bonus scrap at $394/t CFR.
  
  
• A Mediterranean region-based mill booked a Europe-origin cargo, with HMS (80:20) at $370/t and bonus scrap at $390/t CFR Turkiye.
  
  
• A Black Sea region-based steel mill in Turkiye booked a US bulk cargo comprising 10,000 t of HMS (95:5) and 20,000 t of PNS, at an average price of $395/t, indicating an ongoing upward trajectory in bulk scrap prices into Turkiye.
  
  
• A Turkish steel mill in East Marmara procured bulk cargo from Germany, consisting of HMS (80:20) scrap, slated for September delivery, with the deal closing at $368/t.
  
  

Domestic market update

Steel mills are attempting to lower scrap prices, but recyclers resist due to their inability to collect at reduced rates. Earlier this week, the 1.8% currency strengthening prompted mills to adjust local scrap quotes to the current market reality and the majority of Turkish steel producers announced a TRY 100-400/t ($4-15/t) decrease in their purchase prices for domestic scrap. Despite mills' efforts to stabilise scrap prices for better margins, finished steel sales in domestic and export markets remain sluggish.

Negotiations in the ferrous scrap segment were slow, as Turkish mills focused on finished steel due to insufficient demand. The rise in interest rates is a subject of ongoing discussion among market participants.

The Turkish lira stood at TRY 26.67 against the greenback, weakened as compared to TRY 25.57 during the same period last week.

Tosyali new plant moves flats to Algeria pipe facility: Turkish firm Tosyali Holding achieved a significant milestone by transporting flat steel products from its newly launched Iskenderun facility to its pipe production unit in Algeria. This move aims to support local infrastructure needs and follows the successful completion of a major capacity expansion project.

Tosyali-Toyo advances energy independence with solar plant: Tosyali-Toyo, a leading Turkish flat steel producer, is taking strides in its sustainability efforts. With an upcoming solar plant in Osmaniye province, the company aims to bolster the energy independence of its production units. The 19.1 MW (16.06 MWe) capacity plant, spanning 14.67 hectares, is set to be finished by early next year, with commissioning scheduled for February 2024. This initiative aligns with the company's commitment to green initiatives.

Outlook: The imported ferrous scrap trade in Turkiye is expected to remain volatile due to fluctuating currency exchange rates whereas limited material availability from the sellers' side might drive prices up in the next set of deals.