Turkiye: Imported ferrous scrap prices down $2/t w-o-w; steel mills under pressure amid low demand

Turkish imported scrap prices continued to edge down as buyers pulled workable price levels lower whereas European recyclers resisted due to slow scrap inflows and firm collection costs. A few suppliers targeted $382-384/t CFR Turkiye for HMS (80:20) keeping in mind dockside prices of Euro 315-317/t ($339-$341) and low availability.

Recyclers caution that an oversupply of US and Baltic scrap could lead to significant losses for European scrapyards. European scrap dealers either stopped offering to Turkiye or found it challenging to reduce prices below $380/t CFR. Meanwhile, US and Baltic-origin HMS (80:20) was available at $383/t or lower, but Turkish buyers were bidding around $375/t CFR, suggesting a potential disparity.

BigMint's assessment for US-origin HMS (80:20) bulk scrap stood at $383/t CFR, a slight decline of 2/t w-o-w.

BigMint's assessment for bulk HMS (80:20) from the US East Coast stood at $358/t FOB, down $1/t w-o-w.

As per a steel mill source, activity in the ferrous scrap market was slow as Turkish mills continued to struggle with low demand for finished steel products.

According to a trader, scrap prices are feeling the pressure from both ends. Scrap suppliers are encountering sluggish collection rates, while importers are contending with sluggish sales of long steel products.

Turkish exported rebar stood at $590/t FOB. The scrap-to-rebar spread was assessed at $205-207/t FOB, remaining range-bound as compared to last week.

Recent deals:

• A UK-based supplier sold a bulk cargo comprising HMS(80:20) to an Aegean region-based steel mill at $377/t CFR Turkiye
  
  
• A Turkish mill secured approximately 18,000 t of HMS (80:20) scrap at $383/t CFR, followed by a booking of 12,000 t of shredded at around $403/t CFR.
  
  
• A steel mill located in west Marmara secured a mix scrap shipment from the US, comprising HMS (80:20) priced at approximately $383/t,along with shredded scrap and bonus scrap, both priced at $403/t.
  
  
• Another Turkish steel mill finalised a deal for HMS (90:10) scrap from the US at around $386/t CFR.
  
  
• Additionally, an Aegean steel mill procured HMS (80:20) scrap from Europe at $378/t CFR.
  
  

Automotive sector: Turkish automobile sales fell by 22.3% in April, totaling around 76,000 units, still 16.2% higher than the decadal average. Passenger vehicle sales dropped by 20.6% y-o-y and 29.4% m-o-m to 61,000 units. Light commercial vehicle sales declined by 28.6% and 36.4%, with 14,000 units sold. This decline is partly due to an extended holiday period and challenging economic conditions.

The Automotive Distributors and Mobility Association (ODMD) indicated that lower demand impacted both local and imported cars. Import car sales fell by 13.3% to 53,219 units, while domestic sales dropped 37.5% to 22,700 units.

Despite the drop in April, year-to-date figures showed positive growth, with a total of 371,438 units sold--an increase of 11.3%. This rise was driven by a 25.3% surge in imported car sales, which reached 253,983 units. Local sales declined by 10.3% to 117,455 units. The domestic automobile demand in Turkiye is expected to be lower than in 2023.

The Turkish home appliance industry ended Q1 2024 with a 5% rise in total sales, reaching 8.3 million units, thanks to strong domestic demand. However, export shipments dropped by 5%, and the sector faces stiff competition from Chinese manufacturers in the EU. Costs have risen, with GEKAP up tenfold since 2020, affecting export competitiveness. Narrowing credit resources and high interest rates may also impact the domestic market.

Outlook: Turkish mills are expected to maintain a bearish outlook until the market improves or steel sales and demand pick up. If suppliers are reluctant to reduce their prices, bookings will likely remain sluggish in the near term.