Turkiye: Imported ferrous scrap prices dip by $7/t w-o-w amid limited activities and uncertain outlook

The Turkish import scrap market witnessed minimal activity in the last week of the year, with mixed sentiments among industry insiders. Negotiations were limited due to holidays, but attention focused on earlier sales at lower prices. While some anticipate further price weakening, exporters resist due to higher costs and limited supply inflows. Recent deals influenced the price for HMS (80:20) from the US, moving to $416-417/t CFR Turkiye compared to $424-425/t CFR previously.

Recent deals

• A Mediterranean region-based steelmaker secured several cargoes for late January and early February shipments. The deals included HMS (80:20) at $419/t CFR and shredded material at $439/t CFR from a US scrap supplier.
  
  
• The same mill also acquired two HMS (80:20) scrap cargoes at $410/t CFR each from the Netherlands and two cargoes comprising HMS (80:20) at $413/t CFR from the UK.
  
  
• Additionally, a West-Marmara-based mill secured HMS (80:20) at $419/t and shredded scrap at $439/t from the US.
  
  

SteelMint's assessment for the US-origin bulk HMS (80:20) declined by $7/t w-o-w, reaching $417/t CFR Turkiye.

The scrap-to-rebar spread was assessed at $185-190/t as export offers for rebar hovered around $605-610/t on a FOB basis.

Domestic market: Turkiye's steel factories have been grappling with weak sales, especially for long steel products, prompting cautious scrap bookings. Market participants anticipate a price rebound only if demand sees a significant uptick.

Izmir Demir Celik (IDC): Turkish long steel producer Izmir Demir Celik (IDC) has announced a further delay in the completion of its $100 million investment program aimed at nearly doubling the company's steelmaking capacity. Originally scheduled for late Q2 2023, then postponed to the end of 2023, the new completion date is Q1 2024 due to market conditions, supply, delivery, and assembly challenges. Despite delays, machinery and equipment installations are nearly complete. Production tests are expected to commence by the end of Q1 2024. IDC aims to increase its steelmaking capacity from 1.5 million to 2.8 million tonnes and enhance the high-value-added product mix, with rebar and profile rolling mills having capacities of 900,000 tpy and 400,000 tpy, respectively.

Yesilyurt Demir Celik, a Turkish longs producer in the Karadeniz region, is actively pursuing green initiatives with plans for a second solar power plant in Sanliurfa province, investing TRY 988.7 million (about $34 million). The project, spanning 60.55 hectares, is set to have a capacity of 100 MWm (70 MWe), enhancing the company's energy flexibility. Construction is slated for February-May 2024, with operations expected to commence in the second half of June 2024, pending regulatory approval. Yesilyurt Demir Celik boasts a manufacturing capacity of 1.3 million tpy, specialising in wire rod and rebar production.

Kardemir: At year-end, Turkiye's integrated long steel producer, Kardemir, announced its commercial targets for January-March 2024. The supplier aims to intensify billet sales due to more favourable market conditions than in the rebar segment. Kardemir targets selling 616,000 t of steel products in Q1 2024, representing a 7.1% increase from the goals set for October-December 2023. The mill plans to increase the share of billet in its portfolio by 9.5% to 47.6%. This decision reflects a lower sales program for rebar, accounting for only 15.7% of the aggregated volume planned for the period, given the lack of supportive factors in the rebar segment lately. Plans for the wire rod trade narrowed to 109,000 t, down by 1.8%, while Kardemir aims to increase profile shipments by 7.3% to 117,000 t q-o-q.

HRC segment: In the final week of 2023, trading activity in the Turkish HRC segment has diminished. Customers, having re-stocked both local and foreign steel, are now taking time to assess their strategies after the holiday period. Caution prevails in the forecasts, with some participants anticipating sustained weak activity in the first half of January. By late December, the price range for Turkish HRC with a February-March shipment widened to $700-720/t EXW, compared to $700-710/t EXW a week earlier. While participants anticipate more clarity on prices after the holidays, they acknowledge a potentially prolonged period of silence, with activity possibly resuming closer to mid-January.

Construction confidence index: Turkiye's construction sector faces economic challenges and weak fundamentals at year-end, leading to a 3.3% m-o-m decrease in the seasonally adjusted construction confidence index to 88 in December, as reported by the Turkish Statistical Institute (TUIK).

The national currency lira, declined further, with the exchange rate exceeding TRY 29.46 as of now.

Outlook: Market participants anticipate a price rebound only if demand sees a significant uptick. The further price trend remains unclear, and exporters express an inability to offer discounts despite the weak market conditions.